Etsy is cutting 11% of its workforce Wednesday due to what the company said was a “very difficult yet necessary [decision] to better position Etsy for future growth.”
According to an SEC filing on Tuesday, the board approved plans to cut costs amid a restructuring that will cut nearly 225 workers, bringing its workforce down to 1,770, per Fox Business.
Following the news, Etsy stock dropped by over 5 percent.
David Paul Morris/Bloomberg via Getty Images | Josh Silverman, chief executive officer of Etsy Inc., smiles during a Bloomberg Technology television interview in San Francisco, California, U.S., on Wednesday, Feb. 28, 2018.
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Etsy CEO Josh Silverman announced the news to staffers in an email letter on Wednesday that was later made public on Etsy’s website.
“We are operating in a very challenging macro and competitive environment, and [gross merchandise sales] has remained essentially flat since 2021,” Silverman wrote in the email. “At the same time, employee expenses have grown, even as we have introduced significant cost-cutting measures and adjusted or paused hiring plans. This is ultimately not a sustainable trajectory and we must change it.”
In the email, Silverman acknowledged that sharing layoff news right before Christmas was not ideal.
“Once we knew we needed to make workforce reductions, we wanted to communicate our decision with you as soon as possible,” Silverman wrote. “However, that puts us in the unfortunate position of sharing this news amid the winter holidays.”
Most affected employees were told on Wednesday it was their last day, though Etsy did say it would pay salaries through Jan. 2. Additionally, laid-off employees will receive a minimum of 16 weeks’ pay, 12 months of COBRA health care coverage, and three months of career service support.
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The layoffs will cost the company between $25 million and $30 million in severance pay and other costs, the company said in the SEC filing. The restructuring plan is set to be complete by the end of the first quarter of 2024, per CNBC.
Etsy’s CMO Ryan Scott will step down effective Dec. 31 but will stay on as an adviser until the end of June as part of the restructuring plan, per CNBC. He will be replaced by COO Raina Moskowitz who will hold the new title of chief operating and marketing officer.
