Speaker maker Sonos plans to cut 12% of its global workforce due to "uncertainty and challenges stemming from the Covid-19 pandemic," the company announced in a filing Tuesday. It's also closing its retail store in New York City and six satellite offices.
The Santa Barbara-based company said in a May letter to shareholders that it began a review of planned investments and implemented initial actions in March to reduce operating expenses and preserve liquidity. It said those actions included cutting marketing investments, managing and "tightening" inventory and eliminating some discretionary operating expenses.
The company's stock was up more than 1% Wednesday morning. It wasn't immediately clear how many employees the company currently has, but the company's investor relations website says it has 1,450 employees.
The company's CEO, Patrick Spence, said in an emailed statement that the pandemic and resulting economic impacts resulted in the company having to "make some hard choices."
"These changes are necessary in order for us to emerge from this period ready to take advantage of opportunities we see in the future," the statement reads, in part. "Yesterday we hosted a series of global all hands meetings to let our team know we have to say goodbye to approximately 12% of our people ... Supporting them through this transition is our number one priority, and we have focused on severance, equity, healthcare and career transition coaching to assist with finding what comes next."
The filing adds that the company will provide further detail on its business and cost savings resulting from the initiatives when it reports its fiscal third-quarter 2020 results. Sonos estimates the terminations and site closures will cost an estimated $25 million to $30 million in "restructuring and related impairment charges," the majority of which it expects to incur in its fiscal third quarter.
On Tuesday, the company's board of directors also approved a 20% reduction in base salary of the company's CEO between July 1 and December 31, and for other executive officers between July 1 and September 30 of this year. All board members will also forgo their annual cash retainer between July 1 and December 31.
Correction: This story has been updated to reflect that Sonos filed its notice about layoffs on Tuesday.