In a strategic move to counter challenging economic conditions, Etsy is streamlining its operations by laying off 225 employees, constituting approximately 11% of its workforce. The decision, announced via a live stream by CEO Josh Silverman, is aimed at creating a “leaner, more agile” workforce to bolster growth amidst what he described as “very challenging” economic headwinds.
The decision stems from Etsy’s concern over its gross merchandise sales remaining “essentially flat” for the past two years, coupled with an increase in employee expenses despite previous cost-cutting measures. In an internal email, Silverman expressed the need to alter the trajectory for sustainability, prompting the workforce reduction.
The announcement, though unfortunate in timing during the holiday season, assures affected employees that they will remain on Etsy’s payroll until “at least” January 2. This move follows a trend, as Hasbro, a leading toymaker, recently revealed plans to cut 1,100 employees due to lackluster sales just weeks before Christmas.
In response to Etsy’s announcement, its shares experienced a 2.2% drop. Notable departures include Ryan Scott, the Chief Marketing Officer, as part of the company’s effort to reduce its headcount to 1,770 people. Etsy anticipates incurring costs between $25 million and $30 million for severance payments, employee benefits, and related expenses, according to regulatory filings.
In an attempt to motivate the remaining staff, Silverman acknowledged the difficulty of the decision and referred to Wednesday as “one of the hardest days” at Etsy. He reassured the team that, despite the current challenges, the company is navigating through rough waters with the confidence that they will emerge stronger on the other side.
