Shares of Wayfair Inc. plunged 8.6 percent during Thursday's extended sessions, after the company announced it has reduced around 3 percent of its global staff as part of a badly needed restructuring.
In a statement, Wayfair executives said the job cuts affecting around 550 personnel are part of an ongoing assessment of performances and efficiencies. Of the 550 workforce, 350 will lose their jobs at the company's Boston headquarters.
"We find ourselves at a position that invests in too many disparate areas in the business, with uneven quality and speed of execution," the company said.
In a memo to employees, Wayfair chief executive Niraj Shah said that in their two years of aggressive expansion, "we have no doubt built inefficiency and even waste at times in almost every aspect of our company."
The Boston-headquartered home decor firm had risen too quickly and become less efficient as its skyrocketing sales suddenly showed signs of cooling down. The job cuts signify a moment of reckoning for a company viewed as one of the country's most consumer-focused giants.
As part of the process, Wayfair said they have made some organizational revisions that will affect a significant number of its 17,000-people workforce globally, a statement from Wayfair Corporate Communication Manager John Costello, read.
Stocks of Wayfair Inc. have dropped almost 30 percent in the last four quarters. Established almost 18 years ago, Wayfair has never gained a solid profit since then.
Although sales have grown as more customers become comfortable buying furniture items on the internet, the company spends much of its revenue on advertising, deliveries and other operational expenditures.
Based on its most recent earnings report, it's broader-than-projected losses were due to tariffs, which some market experts pushed back against.
A marked slowdown in sales growth was blamed on the impact of taxes, but "we are increasingly worried that growth may be entering a more mature phase," KeyBanc Capital Markets analysts, said.
Wayfair executives have argued that despite a record of declines, the firm has been in growth mode, investing largely in supply chain and European expansion. Its board members point to Amazon as a model, which for many years failed to make a decent profit and funneled sales back into growth.
Some analysts attach little importance to the job cuts. Forrester retail strategist Sucharita Kodali said Wayfair, like many fast-rising and unprofitable digital entities, clearly decided to make the reductions to allay Wall Street.
