It’s belt-tightening season at Wayfair. Last month, CEO Niraj Shah made headlines for a leaked memo urging his employees to work harder. Today, the e-commerce giant cut 13 percent of its global workforce, laying off 1,650 employees.

“We went overboard in hiring during a strong economic period and veered away from our core principles, and while we have come quite far back to them, we are not quite there,” wrote Shah in a company-wide email. He went on to say that after a pandemic-era surge in annual revenue (from $9 billion to $18 billion from 2019 to 2020) and hiring (about 16,100 employees to 16,680 employees from 2020 to 2021), attempts to rightsize since then have been too meager. “In many ways, having too many great people is worse than having too few,” he wrote.

Though today’s layoffs are among the largest in Wayfair’s history, they come on the heels of two significant rounds of cuts following the height of the Covid boom. In the summer of 2022, the company cut 870 jobs; then it cut another 1,750 in January 2023. In November, it reported mediocre third-quarter results, including a net loss of $163 million, plus declines in active customers and net revenue per active customer. Nevertheless, Shah remained optimistic, noting that the brand was positioned for profitability and growth.

To many inside the company, today’s cuts came as a surprise. “We really thought we were done with layoffs after the last two rounds,” one Wayfair employee who asked not to be named tells Business of Home. “If people weren’t feeling shaky before, they’re feeling shaky now.” Wayfair says it will provide severance packages to affected employees.

Wall Street reacted positively to the news, with Wayfair’s share price jumping 10 percent to $56 in early trading. The company’s stock has been in the doldrums for the past two years after falling precipitously from its Covid high of $343 per share.

In a statement released after the news went out internally, Shah wrote that he is increasingly focused on profitability, and with the layoffs, he now expects Wayfair to exceed $600 million in “adjusted EBITDA” (earnings before interest, taxes, depreciation and amortization) for 2024. “We believe that what matters is maximizing our free cash flow,” he wrote. “[We] are treating this as our north star.”