This article first appeared in our sister publication the Boston Business Journal.
Internet retailer Wayfair, one of the largest employers in Massachusetts, cut 350 jobs in its Boston headquarters on Thursday.
A company spokesperson said that in total, 3 percent of the company's workforce was cut, or about 500. The company has more than 17,000 employees worldwide, and over 4,000 in its Boston's headquarters in Copley Place.
"To position the organization to take advantage of the opportunity ahead, we continually evaluate the needs of the business and work to increase efficiencies while aligning our teams with the initiatives that drive the greatest impact for our customers," Jane Carpenter, global head of corporate communications at Wayfair, said in a statement sent to the Business Journal on Thursday. "As part of that process, we have made some organizational changes."
All impacted employees were notified on Thursday, Wayfair said. A company's spokesperson declined to answer further questions about which roles the 350 local employees held at the company.
The company's shares were down more than 9 percent as of noon Thursday, shaving nearly $1 billion off its market cap.
"We are continuing to hire for the many roles needed to drive our long-term success and the continued growth of the business. We remain as confident as ever in Wayfair’s future and our steadfast focus on delighting our customers with the best experience for home," the statement said.
The 18-year-old company has enjoyed fast growth as well as growing pains in recent years. Last year, Wayfair earned a spot on Fortune magazine’s list of the 500 highest-grossing companies in the United States, and opened its first full-service physical retail store in Natick. The move into physical retail that came after Wayfair experimented with holiday pop-up stores at the end of 2018 in Massachusetts and New Jersey.
But investors have been wary of Wayfair's growing spending on marketing as the company continues to reports losses. In its latest quarter, Wayfair lost more than $1 billion in market value after the retailer posted strong revenue and a net loss for the quarter of $272 million—almost double that of the same period a year earlier. In the same quarter, advertising spend was $282 million, or 12.2 percent of net revenue.
"Fundamentally, we expect advertising costs to drop as a percent of net revenue as the repeat customer base grows faster than the new customer base given that repeat customers run at approximately a 7 percent ad cost as a percent of net revenue," Michael Fleisher, Wayfair CFO, said in the latest earnings call. "This has been our long-term trend over the last five years and we expect it will continue over time."
In June last year, the employee-led protest (known as the ‘Wayfair Walkout’) over the company's sale of furniture to operators of migrant detention camps along the U.S. border drew over 1,000 people to Copley Square and sparked a nationwide debate over employee activism and the social responsibility tech workers expect from their employers. Three months later, Wayfair CEO Niraj Shah said publicly that being “non-political” is one trait he looks for in prospective employees.
