Etsy announced on Wednesday that it will be laying off 11% of its workforce. This odd announcement came at the peak of the holiday season, with Etsy saying that the competitive market forced them to restructure their business and lay off workers. Etsy plans to let off roughly 225 workers, bringing the total number of its marketplace staff to about 1,770, which is higher than 2020 levels and comparable to the company’s personnel in early 2022.
Although Etsy’s marketplace has more than doubled in size since 2019, according to a letter sent to staff, CEO Josh Silverman stated that significant improvements are necessary in consideration of the current circumstances. Etsy has released its fourth-quarter guidance along with the news. As of right now, the business projects that revenue will rise by 2% to 3% and that gross merchandise sales will decrease by 1% to 2% from the same quarter last year. It has increased its earlier guidance of 26% to 27% to an adjusted EBITDA margin of between 27% and 28%.
Its shares fell 7% after announcing the layoffs. According to a securities filing from the company, Etsy’s layoffs would cost between $25 million and $30 million, the majority of which will go toward severance payments, employee benefits, and other associated expenses. It is anticipated that the reorganization will eventually “deliver meaningful operational efficiencies and cost savings and/or cost avoidance,” particularly in relation to benefit and reward expenses.
Kimaria Seymour, Etsy’s chief human resources officer, is also departing the company. Instead, Toni Thompson, vice president of global people and talent strategy, will take over as chief human resources officer.
Etsy said it would pay affected employees through at least January 2 in light of the fact that the layoffs coincide with the holiday season when many employees are shopping for gifts for their loved ones. They will also receive other advantages including extended COBRA health insurance benefits and the chance to keep their company laptop, in addition to a severance package consisting of 16 weeks of base pay plus an additional week for every complete year of service.
Will this layoff prove itself useful to the company or not is still to be seen. How Etsy holds on after this holiday season will show the true benefits of this reconstruction.
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