According to a new filing with the SEC, Sonos plans layoffs of 12% of its global workforce.
Sonos says the layoffs are meant to reduce operating expenses and “preserve liquidity.” It directly cites the COVID-19 pandemic as the reason for the cuts. As part of the pare-down, Sonos will also close its flashy Manhattan storefront and six satellite offices.
Executives like CEO Patrick Spence will take a 20% pay-cut, with the reduction starting in July. Other executives will start their 20% pay-cuts in September, through the end of 2020.
“When the pandemic hit, we took immediate action to review our investments for the year and made changes to reduce operating expenses and preserve liquidity,” Spence says. “The pandemic and resulting economic impacts have caused us to have to make some hard choices, including reductions to our workforce.”
The Sonos layoffs reportedly come after several intense meetings yesterday at the company.
Spence thanked all of the employees losing their jobs, and said supporting them in their transition is the company’s number one priority. While Sonos didn’t give any exact numbers other than 12% of the global workforce, we can make some educated guesses.
A Sonos investor website says the company employs around 1,450 employees full-time. That translates into 174 employee layoffs, not counting any part-time employees who were axed.
While COVID-19 undoubtedly prompted the downturn, other fundamental issues are also in play. Sonos’ revenues have been in a sharp year-over-year decline, thanks to the rise of massive smart speaker competitors. Cheap Alexa and Google Assistant devices dominate the market – relegating Sonos to the high-end niche market.
Sonos didn’t do itself any favors when it announced it was ending support for its older speakers. At first, the company announced a recycling program offering 20% off Sonos’ new devices. But an eWaste employee revealed that the perfectly working speakers were bricked and trashed rather than recycled. Sonos has apologized and reversed course, but there are still limitations for keeping old devices in a Sonos ecosystem.