• by Sarah Mahoney  @mahoney_sarah, January 19, 2024

Ouch. Big corporate staff cuts are coming to both Wayfair and Macy’s as the companies scramble to lower costs. At Wayfair, the cuts target 13% of its global workforce, or 1,650 people. At Macy’s, job losses will impact 2,350 and include the closure of five stores.

The Boston-based Wayfair says the layoffs, which target 19% of the corporate team, will produce annualized cost savings of more than $280 million.

“The reality is that we went overboard in hiring during a strong economic period and veered away from our core principles,” writes Niraj Shah, Wayfair co-founder and chief executive officer, in his letter informing employees of the change.

Although the company has already had two significant corporate layoffs since 2022 to try and correct the overheated hiring during the COVID boom, more cuts are required. “These changes were difficult emotionally and have felt challenging for the business,” Shah says. “What we found, however, was that after each reduction we have gotten more of our goals done faster.”

In Wayfair’s most recent quarterly results, the ecommerce company reported a 3.7% gain in revenue to $2.9 billion, while trimming net losses to $163 million, compared to $283 million in the year before.

“We view today’s announcement as more concrete evidence that Wayfair is indeed looking to aggressively right-size its cost structure after [admittedly] overhiring during the boom pandemic period,” writes Seth Basham, an analyst who follows the company for Wedbush. “Further, we believe the company’s long term growth outlook remains intact and do not believe it is exiting any businesses (including international), or sacrificing any key growth investments such as its retail expansion.”

At Macy’s, the cuts are also intended to better shape the company for what’s ahead. “As we prepare to deploy a new strategy to meet the needs of an ever-changing consumer and marketplace, we made the difficult decision to reduce our workforce by 3.5% to become a more streamlined company,” a Macy’s spokesperson says in an email to Marketing Daily.

And the New York-based retailer is shuttering five full-line locations in Arlington, Virginia; San Leandro and Simi Valley, California; Lihue, Hawaii, and Tallahassee, Florida.

The move comes as Tony Spring prepares to take over as Macy’s CEO, replacing the retiring Jeff Gennette. Spring willl have his hands full, considering activist investors who’d like to take the company private launching a $5.8 billion bid, and America’s relentless shift away from department stores.

In Macy’s most recent quarterly results, sales slid again, falling 7% to $4.86 billion from $5.23 billion in the year-ago period. Revenue at Bloomingdale’s dropped 3.2%, while Blue Mercury, the spa and skincare line, gained 2.5%.

Net income plunged to $43 million from $108 million.

Next month, the company will report on holiday sales, and Spring is expected to provide a more detailed vision of his plans for the company.