By Granth Vanaik
(Reuters) -Wayfair said on Friday it would lay off 1,650 employees, or about 13% of its workforce, and forecast annual core profit above estimates, sending the online furniture retailer's shares up as much as 15%.
The company said the job cuts, which affect 19% of its corporate employees, would lead to annual cost savings of $280 million.
CEO Niraj Shah said Wayfair's aim is to maximize the company's free cash flow and potentially reduce its total share count.
"We went overboard in hiring during a strong economic period and veered away from our core principles," Shah said in a note to employees.
Boston-based Wayfair announced rounds of layoffs in 2022 and 2023. In last year's cuts, it eliminated 1,750 jobs, or about 10% of its workforce.
The company had a global workforce of about 17,505 employees as of the end of 2022, according to a 2023 proxy statement.
On Thursday, department store chain Macy's also said it would cut 2,350 jobs and close five stores.
Wayfair said "in a hypothetical flat revenue environment," it expects to deliver over $600 million of adjusted EBITDA in 2024. Analysts on average expect $479.3 million, according to LSEG data.
"Enhanced profitability in 2024 will be primarily driven by optimized payroll, but we also see management pressured to drive stronger efficiencies in logistics and pursue additional prudence in advertising spend," said Jefferies analyst Jonathan Matuszewski.
Wayfair forecast about $70 million-$80 million of costs, consisting primarily of employee severance and benefit costs, most of which would be recorded in the first quarter of 2024.
Since 2021, the company has seen its net revenue drop for nearly two years as after the pandemic customers spent more on travel and entertainment. In November, despite quarterly revenue increasing, Wayfair fell short of beating analyst estimates.
(Reporting by Granth Vanaik in Bengaluru; Editing by Savio D'Souza and Shinjini Ganguli)