Business

Sonos Slashing 12% of Workforce, Closing NYC Store & Cutting Executive Pay

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Courtesy of Sonos

        

Sonos is laying off 12% of its global workforce, and closing its New York retail store along with six satellite offices, due to challenges stemming from the coronavirus pandemic, according to the audio product and smart speaker manufacturer's latest filing with the United States Securities and Exchange Commission (SEC).

Additionally, Sonos CEO Patrick Spence will take a 20% pay cut through the end of the year, while other executive officers will take the same salary cut through September 30, and all members of the Board of Directors are giving up their annual cash retainer through the end of the year. Those changes go into effect July 1.

"The Company believes these initiatives will better align resources to provide further operating flexibility and more efficiently position the business for its long-term strategy," the filing reads. "These actions are solely related to the Company’s previously disclosed initiative to reduce operating expenses and preserve liquidity in the face of the pandemic and are not reflective of any material changes in the Company's business since it reported second quarter fiscal 2020 results."

Sonos says it initiated its plan on June 23, when it hosted a series of global hands-on meetings with employees. It's unclear exactly how many total employees will be impacted -- as Engadget notes, Sonos' investor relations site claims the company has more than 1,450 full-time employees, which means at least 174 people could lose their jobs.

“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 said in a statement provided to Billboard. "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."

In a letter to shareholders last month, Sonos described a "challenging" second quarter, with a sharp 17% year-over-year decline in revenue (from to $210.1 million in Q2 2019 to $175.1 million in Q2 2020). Even so, Sonos said it is seeing strong engagement "from the more than 10 million homes we are already in," evidenced by a 32% increase in total listening hours year-over-year for the month of March. The company launched Sonos Radio in April, and has been promoting a new "At Home With Sonos" marketing campaign during the pandemic.

Sonos says that the terminations and site closures will cost the company between $25 million and $30 million, with the majority of costs to be incurred in the third quarter of Q3 2020.

The news follows a string of recent coronavirus-related layoffs, furloughs and other cost-cutting across the music industry, including at AEG, Live NationStubHub, TicketmasteriHeartMedia, Eventbrite, WME, UTA, CAA and many more companies.

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