In a filing this week, connected speaker maker Sonos noted plans to cut 12% of its workforce, in addition to closing some of its smaller offices and its garish showroom in Manhattan’s Soho neighborhood.
The move follows a letter to shareholders sent last month that acknowledged struggles stemming from a combination of closed retail storefronts and a broader lowering of demand for its luxury audio products.
“Our second quarter was challenging, as we experienced a 17% year-over-year decline in revenue,” the company wrote. “Coming off a strong first quarter, we had expected some softness in the second quarter and we did see challenges primarily from a large retail partner in the US rebalancing inventory as well as some weakness in our German market from inventory rebalancing at our distributor. In March, our total revenue declined 23% year-over-year as the typical replenishment order cycle in the majority of our end markets was disrupted due to the softer global demand environment and broad-based physical retail closures stemming from the COVID-19 pandemic.”
CEO Patrick Spence confirmed the move in a statement sent to TechCrunch, placing much of the blame at the feet of the ongoing COVID-19 pandemic.
“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 wrote. “The pandemic and resulting economic impacts have caused us to have to make some hard choices, including reductions to our workforce, and the closure of some of our smaller offices and our storefront in New York City. 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 chief executive says staff were notified during multiple all-hands meetings over the course of the day yesterday, adding that the hardware maker will be offering up severance, healthcare and career coaching for those impacted by the decision.
The company’s board has also agreed to a 20% cut in Spence’s base salary, effective July 1 through the end of September.