Etsy to Axe 11% of Its Workforce as Weak Sales Persist Into Holiday Season

By Jace Dela Cruz

Dec 14 2023, 00:34 AM EST

Etsy is set to reduce its workforce by 11% as part of a broader effort to restructure and streamline costs amid challenging market conditions.

According to a statement released on Wednesday, the company's decision to lay off approximately 225 employees comes at a time when Etsy faces a competitive landscape and a "very challenging" macroeconomic environment.

Etsy to Axe 11% of Its Workforce as Weak Sales Persist Into Holiday Season — Etsy is set to reduce its workforce by 11% as part of a broader effort to restructure and streamline costs amid challenging market conditions. Michael M. Santiago/Getty Images

Letter to Employees of Etsy CEO

CNBC reported that Etsy CEO Josh Silverman emphasized the necessity of these changes to employees through a letter. He noted that the company's marketplace has more than doubled in size since 2019.

However, Silverman noted that current realities demand sweeping changes. The decision aims to streamline operations and enhance efficiency to navigate the complexities of the market.

"This means we are not bringing our sellers more sales, which is the single most important thing we can do for them. 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," he said in the letter.

Silverman recognized the "unfortunate" timing of the company's decision amid the holiday season. He said all axed workers will remain on the payroll until "at least" January 2.

Etsy Revised Its 4th Quarter Guidance

In conjunction with the announcement of workforce reductions, Etsy has revised its fourth-quarter guidance. The company anticipates a decline in gross merchandise sales between 1% and 2% compared to the same period last year.

However, revenue is expected to increase between 2% and 3%. The adjusted EBITDA margin is projected to be between 27% and 28%, an increase from the previous guidance of 26% to 27%.

Following the announcement of the reduction of employees, shares of Etsy closed 2% lower after falling as much as 7% earlier in the day.

Etsy's workforce reduction follows closely on the heels of toymaker Hasbro's announcement of cutting 1,100 employees, illustrating the broader challenges the companies face in various sectors amid a holiday shopping season marked by soft sales.