Etsy to cut 11% of staff as CEO says company is on 'unsustainable trajectory'

By Emily Bary

Etsy's employee costs have grown even as gross merchandise sales have been near flat, CEO says

Etsy Inc. shares fell more than 7% in Wednesday trading to place among the S&P 500 index's biggest laggards after the e-commerce company announced layoff plans.

The company intended to cut about 11% of its staff, or roughly 225 employees, as it embarks on a broader restructuring. Etsy (ETSY) expects to have headcount of approximately 1,770 people within its core marketplace team once it's done with the moves, which would bring the near where it was in early 2022.

"While the Etsy marketplace is still more than double the size it was in 2019, we need to acknowledge and adjust for today's realities," Chief Executive Josh Silverman said in a note to employees that was also filed with the Securities and Exchange Commission. "We are operating in a very challenging macro and competitive environment, and [gross merchandise sales] has remained essentially flat since 2021. This means we are not bringing our sellers more sales, which is the single most important thing we can do for them."

Silverman said that Etsy is currently on an "unsustainable trajectory" given that employee costs have still risen despite the business backdrop, and that the restructuring moves will help alter the company's path. He expects the changes to make the company more "agile" as Etsy focuses on its "key growth priorities."

Etsy will shake up its leadership in conjunction with the restructuring, as Chief Marketing Officer Ryan Scott is leaving the company. Raina Moskowitz, the company's chief operating officer, will also take on the CMO role.

"Raina will work to drive growth globally by expanding brand consideration and deepening customer trust and loyalty," Silverman said in his note.

Etsy anticipates $25 million to $30 million in charges related to the restructuring.

Its shares have shed a third of their value over the course of 2023 to date, while the S&P 500 SPX has advanced 21%.

-Emily Bary

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12-13-23 1203ET

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