Wayfair to cut 1,650 jobs, about 13% of its workforce
Wayfair (W) announced on Friday morning that it will cut more than 1,600 jobs, or 13% of its workforce. In response to the news, the company's stock jumped over 13% in early morning trading. The ecommerce company joins the likes of Macy's (M), Citigroup (C) and Google (GOOG, GOOGL) who have announced plans to layoff thousands of positions going forward.
Yahoo Finance Anchors Seana Smith and Brad Smith break down the latest development for the company and what it means going forward.
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Editor's note: This article was written by Nicholas Jacobino
Video Transcript
SEANA SMITH: Let's get to a trending ticker here this morning, part of a larger story that we're tracking on Yahoo Finance. And that's Wayfair joining a chorus of companies announcing layoffs in the last couple of weeks. Now, the e-commerce giant this morning cutting, saying that it's going to cut 1,600 jobs, around 13% of its workforce. Shares are jumping ahead of the open. You're looking at gains of nearly 14%.
Now, Wayfair joining the likes of Macy's, Google, Citi, even Amazon. You had Macy's announcing job cuts and store closures on Thursday. Google CEO Sundar Pichai sending a memo to employees warning of more job cuts amid their investments and their allocation to AI. And then Citi also announcing plans to about 20,000 jobs. They made that announcement as part of their earnings report here that we got last Friday. And Brad, this all goes back to the theme that we have been talking about when it comes to cost discipline.
So many of these companies are making these types of strategic decisions, trying to best set up their company for what can be and what looks like is going to be a very uncertain couple of months, a couple of quarters here ahead when we look ahead to what exactly we could hear from the Fed in terms of Fed cuts, the uncertainty, and kind of the cloud of, I guess, keeping many of these companies on the sidelines in terms of their spending plans or reallocating some of their spending plans because of this.
And unfortunately, not necessarily something that we haven't seen in prior years. But we are seeing companies make adjustments on headcount. They're looking to lower their costs. And unfortunately, many jobs are being slashed as a result.
BRAD SMITH: Yeah, spot on. I mean, if we're trying to prepare as well investors for any of these additional announcements to come forward, there's one core thing that you can look to see exactly what type of impact or immediate reaction is going to translate through to the equity market action. And especially for these individual names here.
And it's how much they're going to incur in some of those costs up front. That's something that is actually dollar figure that analysts, investors can start to price into exactly what these levels of layoffs mean for Wayfair in particular, as that was the most recent one in workforce reduction that we had seen come forward this morning. Approximately $70 million to $80 million of costs, primarily employee severance benefits costs there.
But then as you were mentioning, it's a larger read-through as well to what the Fed may do and what the Fed senses about the employment situation, more broadly, and if there are more severe cracks that, if we see more announcements like this, could start to show up because they've been able to hang their hat so much on the employment situation in order to combat inflation to this point.
SEANA SMITH: Yeah, certainly. And that's going to be something that the Fed is going to be closely watching here. But then when you pair that though to the recent data that we've got now in terms of the jobs report for December, much stronger than what the Street was anticipating. The claims number that we got out this week showing a drop in claims, pointing to a stronger, more resilient labor market. So there are signs, I think, from both sides of the spectrum. So that's where the uncertainty lies.
