A massive 20% layoff at San Francisco-based fashion tech company Stitch Fix on Friday capped off a rough first week for Bay Area tech companies, as thousands of more tech workers in the area continue the trend started last year of tech companies quickly downsizing.
Beginning in October of last year, tens of thousands of jobs in the tech sector across the Bay Area have announced mass layoffs. Amongst others, these have included Twitter, Peloton, Facebook parent company Meta, Lyft, Opendoor, Chime, Stripe, Intel, Microsoft, and numerous others. This week alone, Salesforce cut 10% of it’s staff, or around 7,000 jobs, with most coming in San Francisco, with Seattle-based Amazon also announcing 18,000 jobs being slashed. For the former, it’s only the latest round of cuts following several big ones last year. For the latter, even though it’s not California-based, many cuts will be taking place Sunnyvale and elsewhere in the area, as well slamming the breaks on a new logistics center set to be built in the Showplace Square area of San Francisco.
Both of those companies also noted that instead of many reasons by companies given last year, including a more expensive Bay Area and other higher costs, they were cutting jobs because of the end of COVID-19 and the areas of growth they received in the last few years now being too much for current demand.
“This year’s review has been more difficult given the uncertain economy and that we’ve hired rapidly over the last several years,” said Amazon CEO Andy Jassy said in a memo to employees this week. “In November, we communicated the hard decision to eliminate a number of positions across our Devices and Books businesses, and also announced a voluntary reduction offer for some employees in our People, Experience, and Technology (PXT) organization. I also shared that we weren’t done with our annual planning process and that I expected there would be more role reductions in early 2023.
“Today, I wanted to share the outcome of these further reviews, which is the difficult decision to eliminate additional roles. Between the reductions we made in November and the ones we’re sharing today, we plan to eliminate just over 18,000 roles. Several teams are impacted; however, the majority of role eliminations are in our Amazon Stores and PXT organizations. These changes will help us pursue our long-term opportunities with a stronger cost structure.”
Layoffs at Stitch Fix
Stitch Fix joined the other two companies on Friday with not only 1,700 positions set to be let go, but with company CEO Elizabeth Spaulding leaving as a result. While the majority of cuts will be in the Bay Area, other will be taken elsewhere, including the elimination of an entire distribution center in Salt Lake City. While the cuts aren’t the first they have made due to declining sales, including firing 162 in a 2021 layoff and 330 last year in another round, they are the largest to date for the company.
“Today, I’m writing to share two significant changes. Firstly, I’m sharing the difficult news that we will be reducing the size of the Stitch Fix team by about 20% of salaried positions,” said Stitch Fix Founder and current interim CEO Katrina Lake on Friday. “In addition, we are closing our Salt Lake City distribution center, where our team is also impacted. We will be losing many talented team members from across the company and I am truly sorry. Everyone will get an email soon letting you know what this means for you.”
“Second, I also wanted to share that Elizabeth and the Board of Directors have made the difficult decision that Elizabeth will be stepping down as CEO to make room for a new leader. Effective today, I will be stepping in as interim CEO and leading the search process for our next CEO.”
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