Etsy stock fell by as much as 7% Wednesday after the company said it will cut 11% of its staff, or roughly 225 jobs. Etsy stock has lost more than 30% of its value this year.
The handmade-goods focused online marketplace needs to "acknowledge and adjust for today's realities," Chief Executive Josh Silverman wrote in a letter to employees, published Wednesday.
"We are operating in a very challenging macro and competitive environment, and GMS (gross merchandise sales) has remained essentially flat since 2021," Silverman added.
The company's sales growth has slowed for several quarters. The company expects GMS to decline between 1% and 2% in the fourth quarter, according to a regulatory filing Wednesday disclosing the restructuring plan. But Etsy expects revenue to climb between 2% and 3%, according to the filing.
On the stock market today, Etsy stock fell around 5% to 81.63.
Etsy Stock: Temu, Shein Competition
New York-based Etsy was a pandemic stock darling. Etsy stock nearly tripled in value in 2020 as e-commerce spending surged.
But the company has struggled this year. For one, consumers have cut back on discretionary spending. Further, the company has been challenged by online retailers selling low-cost goods, such as Shein and PDD Holdings' Temu.
In response, Silverman said the company must adjust its strategy.
"As we head into 2024, we have identified our 'Vital Few' projects and initiatives that we believe will reignite growth for our sellers and drive buyer consideration and loyalty through a focus on quality, value, and reliability," Silverman wrote.
