ETSY - Etsy announces a layoff as it's 'operating in a challenging environment'

2023-12-13 12:13:55 ET

Shares of Etsy Inc (NASDAQ: ETSY) are trending sharply down at writing after the eCommerce giant announced plans of cutting its global workforce by 11%.

Why is Etsy choosing to lay off employees?

The Brooklyn-headquartered firm said it’s opting for a layoff to streamline costs as it’s “operating in a very challenging macro and competitive environment”.

Etsy expects the announced job cut to cost up to $30 million, as per its filing with the Securities & Exchange Commission on Wednesday. But the restructuring, it added, will “deliver meaningful operational efficiencies and cost savings” over time.

The Nasdaq-listed firm has been struggling to grow its gross merchandise sales since 2021, while its staff-related costs have increased significantly which is “not a sustainable trajectory”, Josh Silverman – the Chief Executive of Etsy wrote in a letter to employees today.

Etsy expects the restructuring to complete in the first three months of 2024.

Etsy Inc updates its outlook for fiscal Q4

On Wednesday, Etsy Inc updated its outlook for its fourth financial quarter as well.

The eCommerce company now forecasts its EBITDA margin to be in the range of 27% to 28% – up from 27% tops it had guided for earlier. According to CEO Silverman:

Etsy is intensely focused on reigniting growth, driving sales for our sellers, and delivering value to stakeholders. We are reorganising our internal structure [to] double down on these efforts.

Etsy expects its revenue to jump between 2.0% and 3.0% on a year-over-year basis in Q4. It, however, continues to see a decline of up to 2.0% in gross merchandise sales in the current quarter. Wall Street currently has a consensus “overweight” rating on .

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