Sonos has laid off approximately 12 percent of its global workforce due to the economic fallout of the COVID-19 pandemic, according to an SEC filing made public this morning. The company is also planning to shut down its New York City retail store and six satellite offices.
"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," Sonos states in the filing.
The broad operational changes and closures are the direct result of a "review of planned investments" the company began back in March. The investigation sought to reduce operating costs and preserve liquidity for the company as the pandemic moved forward.
Downhill momentum — Sonos is estimating some pretty massive costs associated with its organizational changes, including $25 million to $30 million in "restructuring and related impairment charges" it expects to incur in the third fiscal quarter of 2020. Another $9 million to $11 million is expected in employee severance and benefit costs and approximately $16 million to $19 million is expected in site closures and "other charges." That's upwards of $60 million in total.
Cuts all around — Sonos' execs aren't faring too well right now, either. The company also announced that its Board of Directors has approved a 20 percent cut in the base salary of its CEO, Patrick Spence, through the end of the year. Four other executives at the company will see the same cut, but only through the end of September. All members of the company's Board have also agreed to forgo their annual cash retainers through the end of the year.
Expensive isn't in right now — Sonos is struggling for obvious reasons: the majority of people don't have the kind of disposable income to buy $800 speaker systems on a whim right now. That problem is only complicated by companies like Amazon and Google that offer good-sounding audio equipment for a fraction of the price.
It's unclear where Sonos will go from here. The company is facing a pretty stiff lawsuit from Google on top of its other financial woes. If the company ends up folding, it will mean much less competition for the likes of Google and Amazon.