Dive Brief:
- Etsy is laying off 11% of its workforce – about 225 employees – due to the challenging macroeconomic environment, CEO Josh Silverman wrote in a note to employees. Wednesday was the last day of employment for many of those being let go.
- As part of a restructuring plan, Chief Marketing Officer Ryan Scott and Chief Human Resources Officer Kimaria Seymour will both leave the company on Dec. 31, according to a filing with the Securities and Exchange Commission. Chief Operating Officer Raina Moskowitz will become the chief operating and marketing officer, while Toni Thompson, Etsy’s vice president of people and talent strategy since 2020, replaces Moskowitz on Jan. 1.
- CEO Josh Silverman said while the Etsy marketplace is more than double the size it was in 2019, gross merchandise sales have remained flat since 2021. Employee expenses had grown, despite pausing hiring and other cost-cutting measures. “This is ultimately not a sustainable trajectory and we must change it,” Silverman said.
Dive Insight:
Etsy’s workforce will fall to about 1,770 people as a result of the job cuts. That will leave the company’s headcount similar to early 2022 levels, Silverman said in the announcement.
“Following extensive discussions and analysis with senior leaders, it was apparent that a leaner, more agile team would enable us to properly focus on our key growth priorities, move bold and fast, and maintain a sustainable cost structure,” Silverman said. Letting go of some employees “was absolutely not an option we wanted to pursue” but it was a necessary business decision, he said.
Etsy’s severance package for those affected by this week’s layoffs includes 16 weeks of base pay, plus one week for each full year of service; payout of accrued, unused paid time off; a year of COBRA health care coverage for U.S. employees, including mental health support; and three months of career service support. Departing employees can also keep their company laptops.
The company also detailed new responsibilities key executives post-restructuring. Moskowitz will lead Etsy’s marketing, international markets, trust and safety, member support, strategy and operations, and impact teams. As part of the changes, Moskowitz will hand over oversight of payments and fulfillment functions to Chief Product Officer Nick Daniel.
“We view the announcement as prudent given limited visibility on when demand trends might turn for the company, especially given competitive pressures from Chinese online retailers, Temu and Shein, that are aggressively pursuing share and advertising costs to unsustainable levels for certain online advertising categories, while also crowding out increasingly pressured spending on non-essential durables,” Wedbush analysts led by Seth Basham said in a Thursday note.
“Once we knew we needed to make workforce reductions, we wanted to communicate our decision with you as soon as possible,” Silverman said in the letter. “However, that puts us in the unfortunate position of sharing this news amid the winter holidays.”
Etsy on Wednesday also updated its fourth-quarter guidance. The company now estimates that on a year-over-year basis, its consolidated gross merchandise sales will decline approximately 2% to 1% and its adjusted EBITDA margin will range from 27% to 28%. The restructuring plan is not expected to materially impact Etsy’s primary guidance metrics – gross merchandise sales, revenue and adjusted EBITDA for the fourth quarter, the company said in its SEC filing.
“Despite near-term growth challenges, we continue to like Etsy’s longer-term growth opportunities in the US and abroad, and believe its unique marketplace is difficult to replicate,” Basham said.
Etsy isn’t alone in announcing holiday layoffs. Hasbro announced this week that it’s cutting 1,100 jobs. And online retailer Zulily, which recently said last week it planned to lay off more than 800 in February has accelerated those plans. Many employees reported learning via email that Wednesday would be their last day of work, tech news site GeekWire reported.
