Online furniture retailer Wayfair Inc. plans to lay off about 870 employees as it looks to cut back its expenses.
The planned job cuts represent roughly 5% of Wayfair's (W) global workforce and about 10% of its corporate team, the company said in a Friday morning filing with the Securities and Exchange Commission. Wayfair also disclosed that it plans to make "substantial reductions in its third-party labor costs."
Executives anticipate that Wayfair will incur about $30 million to $40 million in costs around severance, benefits, and other areas related to the layoffs. They expect to see "substantially all" of those expenses in the third quarter.
Shares of Wayfair are off more than 8% in Friday premarket trading.
Wayfair's management team previously discussed plans to reduce expenses on the company's second-quarter earnings call earlier in August, as Chief Executive Niraj Shah acknowledged it was "unmistakable that consumer behavior is being impacted by inflationary pressures as well as by economic and geopolitical concerns."
He added that Wayfair's "mass customers" were "being more deliberate about where their discretionary dollars are going," given rising gas and grocery costs. Further, with pandemic conditions easing, some Wayfair customers have opted to shift more discretionary spending toward travel and away from "goods."
The discussion jibed with commentary from Mastercard Inc. $(MA)$ Chief Executive Michael Miebach, who mentioned on the payments giant's earnings call in late July that he had broadly seen "some shift in spend towards gas and groceries from discretionary categories like home furnishings in the U.S."
Wayfair's Shah said on his company's own earnings call that the retailer would be "increasing our cost efficiency focus across all facets" while "not trading off on important future growth drivers and enablers."
Wayfair joins companies like Shopify Inc. (SHOP.T) and Robinhood Markets Inc. (HOOD), which also announced sharp job cuts recently.
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