Etsy restructures, cutting 220 jobs to accelerate innovation and streamline operations.
The online marketplace Etsy announced Wednesday it is laying off approximately 220 employees, representing about 12% of its workforce. This move is aimed at simplifying the company’s organizational structure and fostering faster innovation in the increasingly competitive e-commerce landscape.
In a memo to staff, Etsy CEO Kruti Patel Goyal, who assumed leadership earlier this year, stated that these workforce reductions will better position the company for future growth. The majority of the layoffs will affect Etsy’s product and engineering teams.
The company clarified that these cuts are not primarily a cost-saving measure. Instead, they are intended to enable Etsy to “lean in during a period of strong momentum so that we can move faster and execute with even greater focus,” as detailed in their shareholder letter. An Etsy spokesperson also confirmed that artificial intelligence was not a driving factor behind these layoffs.
Patel Goyal emphasized in her memo, “You’ve heard me say that our first priority was to get the business growing again. Our ultimate goal, though, has always been to take Etsy to the next level of growth so we can fully deliver on our mission and our potential. We are now at the point where we need to make that shift – to build the team, culture, and organization that will make that possible.”
Etsy operates a digital marketplace renowned for its curated selection of handcrafted and artisanal goods. While the company experienced a significant surge in business during the COVID-19 pandemic as consumers increasingly turned to online retail, it has faced challenges in sustaining that momentum as physical retail has rebounded.
The platform also contends with intense competition from established players like Amazon and Walmart, as well as newer entrants such as TikTok Shop and Temu. Under Patel Goyal and her predecessor, Josh Silverman, Etsy has strived to reinforce its identity as a marketplace for unique products, actively seeking to reduce the presence of mass-produced items from resellers. This commitment to its core values was highlighted by a recent advertising campaign during Amazon’s Prime Day, which playfully promoted “non-billionaire makers” named Jeff.
Furthermore, Etsy has been investing in enhancing its website’s search capabilities to deliver more personalized results and expedite item discovery for shoppers.
These strategic adjustments appear to be yielding positive results. In the second quarter, Etsy reported sales of $668.3 million, surpassing analyst expectations of $649.1 million. Sales on its core marketplace saw a robust 9.3% increase.
The company has also raised its full-year guidance for Gross Merchandise Sales (GMS), projecting mid-single-digit growth compared to previous low-single-digit expectations. For the third quarter, Etsy anticipates GMS to range between $2.53 billion and $2.58 billion, exceeding consensus estimates of $2.49 billion.
While Etsy has observed a year-over-year decline in the number of active buyers, currently standing at 87 million, down 0.4% from the previous year, it has concurrently seen an increase in sellers. The platform now hosts 5.7 million sellers, a 5.9% year-over-year rise.
Etsy reported a net loss of $46.65 million ($0.36 per share) for the quarter. This figure includes discontinued operations, notably the recent sale of Depop to eBay for $1.4 billion in cash, a divestiture that follows Etsy’s acquisition of the resale platform for $1.6 billion five years ago. The company has been strategically divesting other brands within its portfolio to sharpen its focus on its core marketplace business.
Excluding discontinued operations, diluted net income per share from continuing operations was 98 cents, a significant improvement from 39 cents per share a year prior, and exceeding FactSet’s consensus estimate of 75 cents per share.
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