By Doyinsola Oladipo
(Reuters) -Online furniture retailer Wayfair Inc said on Friday it would cut about 870 jobs, or 5% of its global workforce, as it looks to cut back operating expenses and realign investment priorities.
Retailers from Wayfair to Restoration Hardware and Target Corp in recent earnings reports noted weaker sales of furniture as U.S. consumers spend less on big-ticket items like furniture in a time of four-decade high inflation.
News of the job cuts sent Wayfair’s share price down sharply. The stock tumbled 17% to $59.24 in midday trading on the New York Stock Exchange.
Discretionary spending is quickly decelerating, according to Oliver Wintermantel, an equity analyst at Evercore ISI.
Wayfair said the costs of the layoffs would be in the range of $30 million to $40 million, mainly due to employee severance and benefit expenses. The bulk of these costs are expected in the third quarter, it said.
Earlier this month, Wayfair reported a larger-than-expected second-quarter loss, hurt by soaring supply chain expenses and declining demand for furniture from pandemic highs.
During COVID-19 lockdowns, sales of furniture and other household items soared as people hunkered down in their homes.
“I think the home furnishing markets even compared to pre-pandemic is still good, because we are spending a lot more time at home,” said Wintermantel. “We’re continuing to update or upgrade home but it’s certainly down versus where we were in the last two years.”
(Reporting by Ananya Mariam Rajesh in Bengaluru and Doyinsola Oladipo in New YorkEditing by Anil D’Silva, Dhanya Ann Thoppil and Frances Kerry)