Sonos began laying off about 12% of its global workforce on June 23, the company disclosed in a Securities and Exchange Commission filing. The company's board of directors also suspended its annual cash retainer, as well as reduced the CEO's base salary by 20% from July 1 through Dec. 31 and other executive salaries by the same amount from July 1 to Sept. 30.
The company is also closing its New York retail store and six satellite offices. The company expects the layoffs and store closures to cost roughly $25 to $30 million in restructuring and ancillary impairment expenses, including about $9 to $11 million related to employee severance and benefit costs and between $16 and $19 million related to site closures and other charges, per the SEC filing.
Its cost-saving efforts are meant to "provide further operating flexibility and more efficiently position the business for its long-term strategy," the company noted in the filing.
As Sonos detailed in its SEC filing, the brand began reviewing its planned investments and cutting down on operating costs, such as marketing, managing inventory and discretionary expenses, in March. The changes were due in part to economic uncertainty stemming from the COVID-19 pandemic.
In a May 6 letter to shareholders, the company noted that its total revenue decreased by 23% year over year in March. "Any time a crisis hits, it's critical to step back and take stock," the letter read. "We have spent time over the past month doing just this, and we are confident that we will exit this period of uncertainty stronger."
Like Sonos, other brands and retailers like Bose, J.C. Penney, Signet, The Children's Place and GNC, have had to close stores. Coresight Research projected that between 20,000 and 25,000 U.S. stores could permanently close in 2020.
Sonos isn't alone in its decision to let employees go. Other retailers, including Bed Bath & Beyond and Stitch Fix, have laid off staffers, following a broader pattern of retailers furloughing their workers to cope with coronavirus losses. Macy's on Thursday also announced that the company was going through a massive out-of-court restructuring that entails cutting its corporate and management headcount by nearly 4,000.