Restructuring and recent business trends
provide accelerated path to profitability goals
Wayfair Inc. (NYSE:W), one of the world’s largest destinations
for the home, today announced additional details related to
right-sizing its cost structure as well as continued strong
business performance since the Cyber Five period. Totaling more
than $1.4 billion in annualized cost actions, the plan – initiated
in August 2022 – is well underway and is expected to accelerate the
company’s timeline for adjusted EBITDA breakeven to earlier in 2023
as the first step towards positive free cash flow.
As a part of this effort, Wayfair today announced a reduction of
approximately 1,750 employees, representing 10% of its global
workforce as of December 31, 2022. This includes approximately
1,200 or 18% of corporate employees. These changes reflect efforts
to eliminate management layers and reorganize to be more agile.
Inclusive of the August 2022 restructuring, the labor portion of
the plan represents approximately $750 million in annualized cost
savings, with the major steps necessary to realize these savings
now complete.
“Although difficult, these are important decisions to get back
to our 20-year roots as a focused, lean company premised on high
ambitions and great execution,” said Niraj Shah, CEO, co-founder,
and co-chairman, Wayfair. “The changes announced today strengthen
our future without reducing our total addressable market, our
strategic objectives, or our ability to deliver them over time. In
hindsight, similar to our technology peers, we scaled our spend too
quickly over the last few years. The good news for Wayfair is that
we have operated in a highly productive and efficient way for the
vast majority of our 20 year history, and we are now simply
returning to that.”
Shah continued, “To our colleagues departing Wayfair, I want to
thank you for your contributions to the company and for the impact
you’ve had on the business. We’re deeply saddened that these
changes will take us in different directions.”
Additionally, business momentum continues to strengthen. In
December, year-over-year gross revenue trends experienced a further
improvement compared to the month of November. “We are encouraged
by our recent topline performance and in particular the momentum in
orders,” commented Niraj Shah. “Our market share continues to
improve as our core offering strengthens across key dimensions such
as availability, speed, and price.”
Combined, the recent topline performance and additional cost
savings are driving faster progress toward the company’s
profitability objectives. The company now expects to reach its
adjusted EBITDA breakeven commitment earlier in 2023 as the first
step toward its goal of generating sustainable positive free cash
flow. Wayfair will provide full results for the quarter and year
ended December 31, 2022 on its February 2023 earnings call.
The following are additional details on the cost plan in
progress:
- Approximately $750 million of annualized labor reductions,
including cash and stock based compensation, relative to Q2’22
levels
- The majority of labor savings are reflected in the company’s
Selling, Operations, Technology, General & Administrative
(SOTG&A) expense line and are largely completed as of
today
- Approximately $500 million of annualized operational cost
savings already underway, with full realization anticipated by late
2023
- These reductions are reflected in the Cost of Goods Sold (COGS)
expense line, and Wayfair may choose to reinvest a portion of these
savings back into the customer value proposition
- In excess of $150 million in identified annualized reductions
relative to previously planned non-COGS, non-labor spend, including
advertising, capital expenditures, and various G&A
expenses
As a result of the workforce reduction, Wayfair expects to incur
between approximately $68 million and $78 million of costs,
consisting primarily of employee severance and benefit costs, most
of which are expected to be incurred in the first quarter of 2023.
The foregoing estimated amounts do not include any non-cash charges
associated with stock-based compensation.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements within
the meaning of federal and state securities laws. All statements
other than statements of historical fact contained in this press
release including, but not limited to, statements regarding our
future results of operations and financial position, including the
achievement and timing of our financial outlook and adjusted EBITDA
breakeven and positive free cash flow goals, our investment plans
and anticipated returns on those investments, our business
strategy, plans and objectives of management for future operations,
including whether we will identify additional cost savings, become
more agile or continue to see business momentum, positive gross
revenue trends and improvements in market share, our future
customer growth and expected consumer activity and behaviors, the
expected reductions in costs resulting from our cost efficiency
plan, the estimated costs resulting from the workforce reduction,
as well as when we expect any such charges, costs or savings will
occur, and the impact of macroeconomic factors, including economic
uncertainty and any impact on consumer spending, fluctuations in
inflation and interest rates, and our response to such events, are
forward-looking statements. In some cases, you can identify
forward-looking statements by terms such as "may," "will,"
"should," "expects," "plans," "anticipates," “continues,” "could,"
"intends," “goals,” "target," "projects," "contemplates,"
“returning,” "believes," "estimates," "predicts," "potential" or
"continue" or the negative of these terms or other similar
expressions.
Forward-looking statements are based on current expectations of
future events. We cannot guarantee that any forward-looking
statement will be accurate, although we believe that we have been
reasonable in our expectations and assumptions. Investors should
realize that if underlying assumptions prove inaccurate or that
known or unknown risks or uncertainties materialize, actual results
could vary materially from our expectations and projections.
Investors are therefore cautioned not to place undue reliance on
any forward-looking statements. These forward-looking statements
speak only as of the date of this press release and, except as
required by applicable law, we undertake no obligation to publicly
update or revise any forward-looking statements contained herein,
whether as a result of any new information, future events or
otherwise.
A list and description of risks, uncertainties and other factors
that could cause or contribute to differences in our results can be
found in our filings with the Securities and Exchange Commission,
including our most recent Annual Report on Form 10-K and subsequent
filings. We qualify all of our forward-looking statements by these
cautionary statements.
About Wayfair
Wayfair is the destination for all things home: helping
everyone, anywhere create their feeling of home. From expert
customer service, to the development of tools that make the
shopping process easier, to carrying one of the widest and deepest
selections of items for every space, style, and budget, Wayfair
gives everyone the power to create spaces that are just right for
them.
The Wayfair family of brands includes:
- Wayfair: Everything home – for a space that’s all you.
- Joss & Main: The ultimate style edit for home.
- AllModern: All of modern, made simple.
- Birch Lane: A fresh take on the classics.
- Perigold: An undiscovered world of luxury design.
- Wayfair Professional: Just right for Pros.
Wayfair generated $12.4 billion in net revenue for the twelve
months ended September 30, 2022 and is headquartered in Boston,
Massachusetts with operations throughout North America and
Europe.
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version on businesswire.com: https://www.businesswire.com/news/home/20230119005931/en/
Media Relations: Susan Frechette PR@Wayfair.com
Investor Relations: James Lamb IR@Wayfair.com
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