Shares of Wayfair are sliding by more than 15% after the discount furniture retailer said it’s axing 870 jobs or 5% of its workforce, the company said on Friday in a regulatory filing.

The Boston-based retailer said the cuts were part of its previously announced efforts to manage its growing expenses. 

About 10% of the eliminated positions are coming from its corporate headquarters while Wayfair is also “in the process of making substantial reductions in its third party labor costs,” according to the filing.

The layoffs will cost Wayfair between $30 and $40 million in severance and benefits packages, the company said.

Known for its deep discounts, including promotions touting up to 70% off on all items on its website including rugs, lamps and couches, Wayfair posted a wider loss than Wall Street expected in its second quarter.

“For the last couple of years, we have indicated that Wayfair should now be at the scale to drive both growth and consistent profitability,” co-founder and chief executive, Niraj Shah said in a statement earlier this month. “The first half of this year has admittedly been less robust than expected, but let me be very clear that our intention is unchanged. We are laser focused on quickly getting back to this goal.”

On an Aug. 4 earnings call, Shah said the company’s “mass customers are being more deliberate about where their discretionary dollars are going, as prices at the gas station and grocery store eat up a greater share of wallet.”

“For the past few months, we have also seen many of those discretionary dollars flow away from goods to services, especially travel as a slow to start spring turned quickly into summer,” Shah added.

Niraj Sha and Steve Conine
Wayfair’s CEO, Niraj Shah, on the right, said sales have been “less robust than expected.”
Boston Globe via Getty Images

Orders per customer fell 6% in the the quarter ended June 30 while revenues fell 15% to $3.3 billion.

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