Investing.com -- Shares in Wayfair (NYSE:W) jumped in premarket U.S. trading on Friday after the online furniture and home goods seller announced it will cut about 13% of its workforce as part of an effort to revamp the business.
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In a note to employees published on Wayfair's website, Chief Executive Officer Niraj Shah said the e-commerce group "went overboard" in hiring during a period of strong economic growth, adding that the group "veered away from our core principles." As a result, approximately 1,650 roles will be eliminated.
"Although we’ve taken important steps to get ourselves optimized to win and fit for the future, the reality is they have not gotten us to where we need to be, which is to have a clean organizational model that provides a healthy foundation to grow from," Shah said.
Boston-based Wayfair said it expects the reductions will lead to annualized cost savings of more than $280 million and help deliver "substantial growth" in adjusted earnings before interest, tax, depreciation and amortization in 2024.
The group noted that it will incur as much as an estimated $80 million in expenses due to the layoffs, primarily due to employee severance and benefit payouts. Most of the costs are likely to be incurred in the first quarter of 2024, Wayfair said.