- Online craft marketplace Etsy said Wednesday it plans to slash an additional 140 positions, or 15% its global workforce, this year in an effort to cut costs and refocus the company on its key initiatives. That brings the total planned staff cuts at Etsy to 230 positions, or 22% of its workforce, for 2017 after layoffs announced in May.
- Job reductions will primarily hit marketing, product management and general and administrative positions, mostly at the company’s Brooklyn headquarters, Etsy said in a press release. Exit costs for the layoffs will run from $6 million to $8.8 million, on top of the $6.5 million to $8 million in exit costs from the layoffs announced earlier.
- Etsy said it is restructuring to focus on what it thinks are the highest-growth areas for the company. Priorities include improving search, discovery and the “buyer journey” through the marketplace, as well as driving buyer frequency, developing seller marketing tools and increasing the effectiveness of Etsy’s marketing spending.
Etsy CEO Josh Silverman hasn’t even been on the job two months and already he is overseeing the elimination of almost a quarter of the company’s staff. The reorganization also comes just two years after Etsy filed its IPO. Since then, the marketplace’s shares have fallen as Etsy lost ground to Amazon since it entered the market with its “Homemade at Amazon.”
“My conviction that Etsy has a unique opportunity within the ecommerce space has intensified during my initial weeks as CEO,” Silverman, who took over for Chad Dickerson this year, said Wednesday in a release. “By focusing on our 'vital few' initiatives, we will be a more disciplined company that is better positioned to create the world's most compelling buying and selling experience."
Etsy recently posted a first quarter loss of $421,000, down from a $1.2 million profit in the year-ago period. Q1 revenue rose 18.4% to $96.9 million and Q1 operating expenses rose 36.4% to $64.3 million. In May, Black-and-White Capital slammed the company for its spendthrift ways.
“[M]anagement’s efforts have failed to fully capture this tremendous opportunity for growth,” Black-and-White Chief Investment Officer Seth Wunder said in a statement. “[T]he company’s historical pattern of ill-advised spending has completely obfuscated the extremely attractive underlying marketplace business model, which should produce incremental EBITDA margins of greater than 50% with low capital investment requirements.”
Also in May private equity firms TPG Group Holdings Advisors, Inc. and Dragoneer Investment Group, LLC revealed significant stakes in Etsy. Chairman Fred Wilson said at the time the board will carefully consider all options to enhance shareholder value, following Etsy's review of its strategic and operational plans.