Etsy is laying off 11% of its employees due to the competitive environment

Etsy The company announced Wednesday that it will lay off 11% of its workforce at the height of the holiday season, as the e-commerce giant looks to restructure its business and streamline costs in the face of an “extremely difficult” macro and competitive environment.

Approximately 225 employees will be cut from Etsy’s workforce, bringing headcount on Etsy’s primary marketplace to approximately 1,770 people, similar to the company’s headcount in early 2022 and above 2020 levels.

Etsy CEO Josh Silverman noted in a letter to employees that Etsy’s marketplace — known for selling handcrafted products and connecting buyers with local artisans around the world — has doubled in size since 2019, but he said today’s realities require sweeping changes.

“We operate in a very tough, competitive macro environment [gross merchandise sales] “It has remained essentially flat since 2021,” the letter read. “This means that we are not bringing in more sales for our vendors, which is the most important thing we can do for them. At the same time, staff expenses have increased, even as we have introduced significant cost-cutting measures and modified or paused recruitment plans. This is ultimately not a sustainable path and must We have to change it.”

The news comes alongside Etsy’s updated fourth-quarter guidance. The company now expects total merchandise sales to decline by between 1% and 2% during the period compared to the same quarter last year, and for revenues to increase by between 2% and 3%. It expects EBITDA margin to be between 27% and 28%, up from previous guidance of 26% to 27%.

Etsy shares fell 7% after the announcement.

“Etsy is intensely focused on reigniting growth, increasing sales for our nearly 7 million sellers around the world, and delivering value for all of our stakeholders. Today, we announced that we are reorganizing our internal structure so we can double down on these efforts,” Silverman said in a statement to CNBC. “Which unfortunately means saying goodbye to approximately 225 of our colleagues.”

The layoffs come two days after the playmaker Hasbro The company announced it will lay off 1,100 employees as it faces light sales that have continued into the crucial holiday shopping season. Hasbro had about 6,300 employees as of earlier this year. According to the company fact sheet.

The layoffs at Etsy will cost between $25 million and $30 million, the bulk of which will be used for severance payments, employee benefits and other related costs, the company said in a securities filing.. Over time, the restructuring is expected to “deliver meaningful operating efficiencies, cost savings and/or cost avoidance,” especially when it comes to payroll and benefits costs.

The restructuring process is expected to be completed by the end of the first quarter of 2024.

As part of the restructuring, Ryan Scott, Etsy’s chief marketing officer, will leave the company and his position will be consolidated under the position of chief operating officer, currently held by former Etsy CEO Raina Moskowitz. American Express executive.

Kimaria Seymour, Etsy’s chief human resources officer, will also leave the company and will be replaced by Tony Thompson, the company’s current vice president of global people and talent strategy.

Given that the layoffs come in the middle of the holiday season when many employees are shopping for gifts for loved ones, Etsy said it will pay affected employees until at least January 2, even though the last day of work for most employees will be Wednesday.

They will receive a bonus of 16 weeks of base pay, plus one week for each full year of service, along with other benefits such as extended health insurance benefits from COBRA and the ability to keep their company laptop.