Etsy, the popular online marketplace, faced a notable dip in its shares following the announcement of a restructuring plan that involves a workforce reduction of 11%. The stock remained down more than 5% in the afternoon after Etsy disclosed in a Tuesday SEC filing that its board had approved the plan aimed at streamlining operations and cutting costs.
This move will result in the layoff of approximately 225 employees, constituting about 11% of Etsy’s workforce. The company’s headcount will be reduced to 1,770 people, roughly aligning with the employee levels in early 2022. Despite the challenging decision, Etsy emphasized that these steps are essential for adapting to the current market realities.
Etsy CEO Josh Silverman addressed the workforce reduction in a letter to employees, stating, “[w]hile the Etsy marketplace is still more than double the size it was in 2019, we need to acknowledge and adjust for today’s realities.” He highlighted the challenging macro and competitive environment, noting that gross merchandise sales have essentially remained flat since 2021. The company faced growing employee expenses despite implementing cost-cutting measures, prompting the need for a more sustainable trajectory.
Acknowledging the unfortunate timing of the layoffs just ahead of the holiday season, Silverman expressed the company’s desire to communicate the decision promptly. He stated, “Once we knew we needed to make workforce reductions, we wanted to communicate our decision with you as soon as possible.” The CEO recognized the challenges this posed to affected employees during the winter holidays.
Departing employees will receive a minimum of 16 weeks’ pay, 12 months of COBRA health care coverage, and three months of career service support as part of Etsy’s commitment to providing a cushion during the transition.
In addition to the workforce adjustments, Etsy announced the departure of Chief Marketing Officer Ryan Scott, effective December 31. Scott will continue as an adviser until as late as the end of June. Chief Operating Officer Raina Moskowitz will step into the role of Chief Operating and Marketing Officer, succeeding Scott in overseeing these critical functions.
As Etsy navigates these changes, the company aims to position itself strategically in the face of evolving market dynamics. The announcement reflects Etsy’s commitment to ensuring a sustainable and efficient operation in an increasingly competitive landscape. Investors and industry observers will be keenly watching how these strategic moves influence the company’s performance in the coming quarters.
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