Sonos is closing its New York retail store and will shed around 12-percent of its staff, the company has confirmed today, as it aims to offset the impact of COVID-19 on its multi-room speaker business. The news comes after Sonos warned investors back in March that it was hunting ways to save cash, including trimming marketing and better managing inventory.
The shuttering of the New York City store, opened back in 2016 in Greene Street, SoHo, comes as a blow for the company. Intended to blur the line between technology experience and retail location, it features a number of soundproof rooms decorated by artists and each featuring different models from the company’s range.
More recently, meanwhile, it was to become the hub for one of the key features of Sonos Radio, the streaming music service for Sonos owners. Sonos Sound System, effectively the company’s equivalent of Beats 1 radio on Apple Music, was to be recorded in a specially-constructed studio at the store, including 60 minute hosted sessions by guest artists. According to a Sonos spokesperson, the company has been recording Sonos Sound System remotely since its launch anyway, because of social-distancing for the coronavirus, and now that will continue to be the process for the show.
That won’t be the only change in facilities. Six satellite offices are being closed, Sonos confirmed in an SEC filing today. Approximately 12-percent of Sonos’ workforce worldwide will be leaving the company, something the company says “will better align resources to provide further operating flexibility and more efficiently position the business for its long-term strategy.”
“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 pointed out. “The Company will provide further details on its business and the cost savings resulting from these initiatives when it reports third quarter fiscal 2020 results.”
It’ll cost around $25-30 million to complete the restructuring, Sonos estimates, the majority of which will hit the Q3 2020 fiscal quarter. Of that, as much of $19 million could be incurred as part of facilities closing. Sonos CEO Patrick Spence will take a 20-percent pay cut for the second half of 2020, as will other Sonos executives between July 1 and September 30. Sonos’ directors will forgo their annual cash retainer for the second half of 2020, too.
The news comes as Sonos releases new products like the Arc soundbar, and a new color version of its well-reviewed – but expensive – Move portable speaker. The company also released Sonos S2, its next-generation software which paves the way for an array of new functionality, but also left some of the earliest of users frustrated that their speakers were no longer compatible.