Etsy (NASDAQ:ETSY) shares fell sharply today after the company announced a plan to cut 11% of its workforce. The news comes as the online marketplace looks to streamline its business in a challenging macro environment.
The layoffs of around 225 employees are expected to cost the company around $25 million to $30 million, largely made up of cash expenditures consisting of severance payments, employee benefits, and related costs.
In a letter to employees, Etsy’s CEO Josh Silverman said the company has more than doubled in size since 2019, but the current challenging environment calls for changes.
“We are operating in a very challenging macro and competitive environment, and [gross merchandise sales] has remained essentially flat since 2021,” he wrote.
Silverman added that employee expenses have grown despite the company introducing significant cost-cutting measures and adjusted or paused hiring plans. “This is ultimately not a sustainable trajectory and we must change it,” he commented.
Etsy also provided updated fourth-quarter guidance. The company now sees gross merchandise sales declining between 1% and 2% in Q4 compared to the year-ago period. In addition, revenue is expected to increase between 2% and 3%, while the company sees its adjusted EBITDA margin between 27% and 28%, up from previous guidance of 26% to 27%.
Etsy shares are down more than 4% at the time of writing.
As part of its restructuring, the company also announced the departure of Ryan Scott, its chief marketing officer, with Raina Moskowitz, formerly chief operating officer, assuming the title of chief operating and marketing officer.
Furthermore, Etsy said chief human resources officer Kimaria Seymour will also depart, effective December 31. Seymour will be replaced by Toni Thompson, Etsy’s current vice president of people and talent strategy.