Proactive organizational redesign accelerates
profitability goals
BOSTON, Jan. 19,
2024 /PRNewswire/ -- Wayfair Inc. (NYSE: W), one
of the world's largest destinations for the home, today announced
details related to right-sizing its cost structure, following the
series of actions originally initiated in August 2022. After a comprehensive,
organization-wide analysis of the appropriate team size and
structure, the company announced a workforce reduction involving
approximately 1,650 employees, representing approximately 13% of
its global workforce and approximately 19% of its corporate team,
in each case as of December 31, 2023.
This action is expected to deliver annualized cost savings of more
than $280 million.
"Earlier today I sent a note to all Wayfair employees detailing
today's action and the rationale behind it, which is available for
everyone to read on our company site. The changes announced today
reflect a return to our core principles on resource allocation,
such as getting fit on spans and layers as well as focusing on our
highest priorities. As a result, we're reducing team sizes across
the organization, as well as reducing seniority in certain roles
that we plan to rebuild with modified leveling over the course of
this year," commented Shah, CEO, co-founder, and co-chairman,
Wayfair. "While today's actions will bolster our Adjusted EBITDA
roadmap, I am increasingly focused on generating Adjusted EBITDA in
excess of equity-based compensation as well as capital
expenditures, and intend to drive meaningful improvements here
quickly. We believe that what matters is maximizing our Free Cash
Flow while simultaneously tightly controlling and ultimately
reducing total share count, and are treating this as our north
star."
Shah continued, "To our colleagues departing Wayfair, I want to
thank you for your incredible contributions to Wayfair and to our
customers. You have so much to be proud of. I truly regret the
impact this will have on you."
The incremental cost savings provide the company further
confidence in the path to deliver substantial growth in Adjusted
EBITDA in 2024 on both a dollars and margin basis. "Although
persistent category weakness makes revenue growth challenging, we
remain encouraged by the share gains we continue to see,"
commented Shah. "Based on today's announcement, in a
hypothetical flat revenue environment - inclusive of the rebuilt
roles - we would now expect to deliver over $600 million of Adjusted EBITDA in 2024." Wayfair
will provide full results for the quarter and year ended
December 31, 2023 on its February 2024 earnings call.
The following are additional details on the workforce
realignment plan announced today:
- Approximately $150 million of
annualized cash compensation savings, roughly $125 million of which will be reflected in the
company's Selling, Operations, Technology, General &
Administrative (SOTG&A) expense line with the remainder from
the Customer Service & Merchant Fees expense line. These are
net savings figures incorporating the company's plans to rebuild a
portion of the headcount over 2024.
- Approximately $80 million of
annualized equity-based compensation relief associated with the
impacted employees.
- Approximately $50 million of
annualized savings related to a reduction in capitalized technology
labor, which is accounted for as a component of the company's
capital expenditures line item.
As a result of the workforce reduction, Wayfair expects to incur
between approximately $70 million and
$80 million of costs, consisting
primarily of employee severance and benefit costs, most of which
are expected to be incurred in the first quarter of 2024. The
foregoing estimated amounts do not include any non-cash charges
associated with equity-based compensation.
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 sites 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 $12.0 billion in
net revenue for the twelve months ended September 30, 2023 and is headquartered in
Boston, Massachusetts with global
operations.
Media Relations Contact:
Susan Frechette
PR@wayfair.com
Investor Relations Contact:
James Lamb
IR@wayfair.com
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
and Free Cash Flow goals, our business strategy, plans and
objectives of management for future operations, including becoming
more agile, positive gross revenue trends and improvements in
market share, our future customer growth and expected consumer
activity and behaviors, 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, 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.
Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements
presented in accordance with generally accepted accounting
principles ("GAAP"), this press release contains certain non-GAAP
financial measures, including Adjusted EBITDA and Free Cash Flow.
We use these non-GAAP financial measures internally in analyzing
our financial results and believe they are useful to investors, as
a supplement to GAAP measures, in evaluating our ongoing
operational performance.
We calculate Adjusted EBITDA as net income or loss before
depreciation and amortization, equity-based compensation and
related taxes, interest income or expense, net, other income or
expense, net, provision or benefit for income taxes, net,
non-recurring items and other items not indicative of our ongoing
operating performance. Adjusted EBITDA Margin is calculated by
dividing Adjusted EBITDA by Net Revenue. We disclose Adjusted
EBITDA because it is a key measure used by our management and board
of directors to evaluate our operating performance, generate future
operating plans and make strategic decisions regarding the
allocation of capital. In particular, we believe the exclusion of
certain expenses in calculating Adjusted EBITDA facilitates
operating performance comparisons on a period-to-period basis as
these costs may vary independent of business performance. For
instance, we exclude the impact of equity-based compensation and
related taxes as we do not consider this item to be indicative of
our core operating performance. Investors should, however,
understand that equity-based compensation and related taxes will be
a significant recurring expense in our business and an important
part of the compensation provided to our employees. Accordingly, we
believe that Adjusted EBITDA provides useful information to
investors and others in understanding and evaluating our operating
results in the same manner as our management and board of
directors.
We calculate Free Cash Flow as net cash provided by or used in
operating activities less net cash used to purchase property and
equipment and site and software development costs (collectively,
"Capital Expenditures"). We disclose Free Cash Flow because it is
an important indicator of our business performance as it measures
the amount of cash we generate. Accordingly, we believe that Free
Cash Flow provides useful information to investors and others in
understanding and evaluating our operating results in the same
manner as our management.
We calculate forward-looking non-GAAP financial measures based
on internal forecasts that omit certain amounts that would be
included in forward-looking GAAP financial measures. We do not
attempt to provide a reconciliation of forward-looking non-GAAP
financial measures to forward looking GAAP financial measures
because forecasting the timing or amount of items that have not yet
occurred and are out of our control is inherently uncertain and
unavailable without unreasonable efforts. Further, we believe that
such reconciliations would imply a degree of precision and
certainty that could be confusing to investors. Such items could
have a substantial impact on GAAP measures of financial
performance.
The non-GAAP financial measures have limitations as analytical
tools. We do not, nor do we suggest that investors should consider
such non-GAAP financial measures in isolation from, or as a
substitute for, financial information prepared in accordance with
GAAP. Investors should also note that the non-GAAP financial
measures we use may not be the same non-GAAP financial measures and
may not be calculated in the same manner as that of other
companies, including other companies in our industry.
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SOURCE Wayfair Inc.