Retail industry companies are continuing to trim their headcounts: H&M cut 1,500 jobs and DoorDash announced it would let 1,250 employees go on March 1, 2023. H&M is seeking to boost efficiency as part of a $193 million global cost-cutting effort, while DoorDash is right-sizing its workforce after experiencing massive growth during the COVID-19 pandemic.
“Most of our investments are paying off, and while we’ve always been disciplined in how we have managed our business and operational metrics, we were not as rigorous as we should have been in managing our team growth,” said Tony Xu, CEO and Co-founder of DoorDash in a publicly shared message to employees. “That’s on me. As a result, operating expenses grew quickly.”
DoorDash will offer affected employees 17 weeks of compensation and their February 2023 stock vest. They will continue to receive healthcare benefits through the end of March 2023, at which point they will be eligible for COBRA coverage for up to 18 months.
The official termination date of March 1, 2023 will give employees with visas time to find a new job in the U.S. DoorDash also will create an opt-in directory for companies to reach affected employees and offer recruiting support to help them find their next job.
Xu emphasized that “our business fundamentals remain strong” despite the layoffs. The delivery company plans to continue to hire new workers and add back recruiting capacity “in a more targeted and rigorous way.” The details of this strategy were shared in an internal meeting, but not shared in the public statement.
Retailers and retail-adjacent companies alike have been cutting costs as they fight inflation. Amazon reportedly closed unprofitable divisions as it scaled back physical store plans, while Meta laid off 11,000 employees, or approximately 13% of its staff, and Google parent Alphabet slowed down its pace of hiring. Other major companies making cuts include:
- Peloton, which laid off 500 workers in October 2022 on top of 2,800 cuts made in February 2022 as the fitness retailer continues its pursuit of a turnaround;
- Gap, which eliminated 500 corporate positions in September 2022 through a combination of layoffs and ending attempts to fill empty roles;
- Wayfair, which laid off 870 workers, about 10% of its corporate employees, in August 2022 as part of an effort to control costs; and
- Bath & Body Works, which laid off 130 employees, mostly from leadership roles, in August 2022 as part of an effort to create organizational efficiencies by simplifying and realigning its operating structure.