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Home News Citing ‘weak macroeconomics’, Wayfair exits German market

Citing ‘weak macroeconomics’, Wayfair exits German market

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Citing ‘weak macroeconomics’, Wayfair exits German market
Wayfair photo of delivery man from Wayfair media assets
Photo courtesy of Wayfair

Boston — Wayfair has shut down its operations in Germany, resulting in the layoff of about 730 employees. In an email sent to employees Jan. 10, CEO and co-founder Niraj Shah wrote: “After careful consideration, we made the difficult decision to exit the German market, effective today.

“Germany has been an important part of our journey for the past 15 years, serving as one of our original entry markets into Europe, alongside the UK,” he wrote. “During this time, we built a solid base of customers, developing supplier partnerships to provide the selection and value in the home category that defines our brand, and we built a strong European infrastructure.”

He said while the company was able to develop Wayfair as a household brand in the United Kingdom, “our Germany efforts lagged behind, but we set out to close that gap over the past year. However, despite these efforts, scaling our market share and improving our unit economics in the German market has proven challenging due to factors such as the weak macroeconomic conditions for our category in Germany, the lower maturity of our offering, our current brand awareness and our limited scale.”

Of the 730 employees impacted, the company expects about half of these positions will relocate to other corporate offices, according to Wayfair’s SEC filing.

The restructuring is estimated to cost Wayfair between $102 million and $111 million, of which about $40 million to $44 million in cash is employee-related costs including severance, benefits, relocation and transition costs, and about $62 million to $67 million are non-cash charges related to facility closures and other wind-down activities.

The charges will likely be incurred in the fourth quarter of 2024 and first quarter of 2025. Any cost savings are expected to be reinvested in the company’s core initiatives and remaining international markets in 2025.

Shah’s email said Wayfair “will continue to focus on operations and investments in international markets — Canada, the UK and Ireland — where we have meaningful market share and which we believe hold significant potential to replicate the success we’ve achieved in the U.S.”

He also said global initiatives include “expanding our physical retail footprint, optimizing our market reach, growing our loyalty program, Wayfair Rewards and developing our Wayfair Verified program” along with continued investment in technology.

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