Wayfair, one of the only (sorta-kinda) companies able to offer competition to Amazon, has announced layoffs of over 500 employees, amounting to 3% of its workforce. At least 350 will impact their Boston office. Employees were notified via a company-wide email from Wayfair CEO Niraj Shah today. The company has struggled for years to turn a profit.

"Since we founded the company in 2002 we have always had periods where we invested very heavily in the business and periods where we have worked to drive greater efficiency of all our resources," he wrote. "On reflection this last period of investment went on too long (as an example, doubling our OpEx team from 4,000 to 8,000 in just two years) and we find ourselves at a place where we are, from an execution standpoint, investing in too many disparate areas, with an uneven quality and speed of execution... The difficult human impact of this is that today we are telling approximately 550 people that their roles no longer exist and they will depart Wayfair."

Said one employee on social media: "Please offer your thoughts and prayers to the folks who got let go from Wayfair today, including me. I’m absolutely stunned and need time to process this. The timing couldn’t be worse, except for my boss who was also hit and is expecting a new baby next week. Terrible." Another employee referred to it as "Wayfair's Valentiness Day Massacre".

A spokeswoman for Wayfair said, as part of what can only be described as standard boiler-plate language: “To position the organization to take advantage of the opportunity ahead, we continually evaluate the needs of the business and work to increase efficiencies while aligning our teams with the initiatives that drive the greatest impact for our customers. As part of that process, we have made some organizational changes that affect approximately three percent of our global workforce.”

Wayfair has struggled. They have invested considerably in sales, infrastructure, and recruitment - but remain far from profitability. In addition, the trade war hit them. In a conference call with investors in late October, they reported that tariffs were making consumers more cautious about purchasing. They forecast a much slower pace of growth for Q1 2020, as many of the products they sell saw a 25% increase in cost due to the trade war.

On the latest news, Demitrios Kalogeropoulos, an investment analyst with The Motley Fool who follows Wayfair, opined:

"The announcement implies that Wayfair will have bad news to report in its upcoming holiday-season earnings report on Feb. 28. Investors have been bracing for a modest growth slowdown, along with continued losses, for the seasonally critical fourth-quarter. Yet Wayfair's cost-cutting shift suggests the retailer faced surprisingly strong competitive challenges in late 2019 and into early 2020."

In other words: watch this space. This is unlikely to be the last round.