Furniture retailer Wayfair (W) became the latest business to cut technology jobs, announcing a round of layoffs on Friday as official data showed further cooling in the U.S. labor market. In a regulatory filing posted March 7th, the e-commerce company said it would cut about 340 staff from its technology team, mirroring moves elsewhere in the tech sector.
The company, which like Home Depot (HD) has battled sluggish demand for home goods amid high mortgage interest rates and a weakening consumer outlook, said it will incur charges ranging from $33 million to $38 million, primarily related to severance, benefits, and transition costs for the affected employees. Shares of Wayfair rose, chiefly helped by an upgrade to Buy from Hold at Jefferies.
U.S. Labor Market Cools
It comes amid broad signs of a cooling in the labor market. Nonfarm payrolls increased by a seasonally adjusted 151,000 on the month, less than the 170,000 forecast, the Labor Department’s Bureau of Labor Statistics reported Friday. The figure was up slightly on the 125,000 in January, which was revised down from the initial reading of 143,000. The unemployment rate edged up to 4.1% from 4.0% the month before.
Yesterday, the Challenger jobs cut report showed U.S. employers announced 172,017 layoffs in February, up 245% from January and the highest monthly figure since July 2020, during the peak of the pandemic. More than one-third of the total came from Elon Musk’s DOGE cull of federal employees, while technology firms listed another 14,554 in cuts.
Adding to these, Hewlett Packard Enterprise (HPE) said yesterday in its earnings update that it will trim its workforce by around 2,500, or 5%, as part of a cost-cutting strategy.
In January, Meta Platforms (META) laid off 3,600 staff in what it said was a “low performance” cull. Other tech firms have followed suit. Computer and printer manufacturer HP (HPQ) plans to lay off between 1,000 and 2,000 workers, while semiconductor company Microchip (MCHP) said it will fire 2,000 staff and Salesforce (CRM) announced plans to cut over 1,000 jobs.
Beyond the government and tech, retail is also going through retrenchments amid some soft earnings updates from the likes of Walmart (WMT), Costco (COST) and Target (TGT). According to the Challenger report, retail saw 38,956 job losses for February as companies such as Macy’s (M) and Forever 21 made sharp cuts to their headcount.
Is Wayfair a Good Stock to Buy?
On Wall Street, analysts have a Moderate Buy consensus rating on Wayfair stock, based on 13 Buys, ten Holds and no Sells. The average W price target of $53.14 implies about 60% upside.
