Etsy, the renowned online marketplace specializing in handmade items, has recently announced significant lay-offs, affecting approximately 225 employees, which constitutes around 11% of its workforce. The decision comes as the company’s CEO, Josh Silverman, recognizes the need for sweeping changes in light of current market conditions.
Despite enjoying growth in recent years, Etsy aims to restructure its operations and reduce costs during this holiday season. The company’s officials acknowledged that several macroeconomic and competitive challenges necessitated this strategic move. Flat gross merchandise sales combined with escalating employee expenses proved to be influential factors behind the decision.
As a consequence of the lay-offs, Etsy’s updated fourth-quarter guidance anticipates a decline in gross merchandise sales. However, the company expects to boost its revenue and maintain an adjusted EBITDA margin between 27% and 28%. The announcement regarding the layoffs immediately impacted Etsy’s stock value, with shares experiencing a 2% drop at the end of the trading day, following an earlier 7% decrease.
The company estimates that the restructuring process will require approximately $25 million to $30 million, mostly allocated for severance payments, employee benefits, and other associated costs. Etsy intends to complete this comprehensive restructuring by the end of the first quarter of 2024.
In addition to the lay-offs, Etsy will also witness changes in its executive leadership. The chief marketing officer will be departing, and their responsibilities will be consolidated under the chief operating officer position. Furthermore, the chief human resources officer will step down, with their successor set to be the current vice president of global people and talent strategy.
Acknowledging the impact of these changes on its workforce, Etsy has committed to supporting affected employees. The company plans to continue paying them until at least January 2, while offering severance packages, extended COBRA health insurance benefits, and the option to retain their company laptops.
Indeed, these measures indicate the company’s determination to adapt to an evolving marketplace and ensure its long-term sustainability amidst fierce competition. As Etsy moves forward with its restructuring plans, its executives remain confident that these changes will position the company for future success.
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