Sonos announces 12% workforce reduction and reorganization for improved operating model

Investing.com -- On February 5, 2025, audio equipment manufacturer Sonos (NASDAQ:SONO), Inc. declared a company-wide reorganization and workforce reduction, affecting approximately 12% of its employees. The decision to eliminate positions is subject to local laws and consultation requirements in certain jurisdictions. These actions, which were committed to on February 4, 2025, are designed to enhance the company’s operating model and cost structure, setting the stage for long-term success.

Sonos anticipates incurring restructuring and related charges of about $15 to $18 million, primarily due to employee severance and benefits costs. The company expects these charges to be incurred mostly in the second quarter of fiscal 2025.

However, the company’s estimates of the charges and expenditures, as well as their timing, are subject to a number of assumptions, including local law requirements in various jurisdictions. Therefore, actual amounts may differ significantly from estimates.

Tom Conrad, the Interim Chief Executive Officer of Sonos, addressed the reorganization and workforce reduction in a letter to the company’s employees. In the letter, Conrad explained that around 200 positions would be eliminated. He also outlined the company’s commitment to support those affected by providing severance packages, the option for a one-on-one meeting with the People team, and assistance in their job search.

Conrad further explained the rationale behind the reorganization. He stated that the company had become entangled in too many layers, making collaboration and decision-making more challenging. To address this, the company is transitioning into smaller, more focused teams with less hierarchy.

In a significant move, the Product organization will be restructured into functional groups for Hardware, Software (ETR:SOWGn), Design, Quality, and Operations. This shift will move away from dedicated business units devoted to individual product categories. The new structure aims to improve core experience and product delivery through cross-functional project teams.

Impacted employees will receive severance pay based on their tenure, and their Restricted Stock Units (RSUs) will continue to vest through February 15. Employees on the quarterly bonus plan will be eligible for a Q1 bonus if targets are met. Additionally, US employees will continue to receive healthcare coverage throughout the severance period.

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