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Boston-based Wayfair lays off 13% more of its workforce

Wayfair CEO Niraj Shah said the company “went overboard in hiring” during the COVID-19 pandemic.

January 20, 2024

1 minute to read

Boston-based online furniture retailer Wayfair laid off 13 percent of its workforce on Friday, marking the third round of layoffs since 2022.

Wayfair co-founder and CEO Niraj Shah published an open letter to employees announcing the dismissal of 1,650 workers, citing a period of overhiring during the COVID-19 pandemic.

“The natural question is to ask ‘Why?’ I think the reality is that we went overboard in hiring during a strong economic period and veered away from our core principles, and while we have come quite far back to them, we are not quite there,” Shah wrote in the letter.

A little over a month ago, Shah said the company was “back to winning” but urged Wayfair employees to work harder.

“Working long hours, being responsive, blending work and life, is not anything to shy away from. There is not a lot of history of laziness being rewarded with success,” Shah wrote in a Dec. 13 email to employees.

The company’s annual sales soared from $9 billion to $18 billion in 2020 as the COVID-19 pandemic swept the nation and Americans turned to online retailers for merchandise that improved their quality of life at home. Shah said that the surge in business prompted leaders to grow the team, but the windfall eventually fizzled out.

“By mid-2022, it was clear we were in a bust period,” Shah wrote in Friday’s letter. He also referenced two previous rounds of layoffs and restructuring since 2022. He said those changes were “difficult emotionally” but the staff reductions have increased company efficiency.

Wayfair reported a $564 million loss for the first nine months of 2023. In its most recent quarter, the company documented a net loss of $163 million.

Friday’s layoffs, which are reported to save the retailer about $280 million, prompted the company’s stock price to increase by 15 percent in pre-market trading.

Shah said the company is giving severance and other resources to laid-off employees.