Denver-based real estate behemoth, RE/MAX, made a sobering announcement on Friday, revealing its decision to execute a 7% reduction in its workforce. This distressing move is part and parcel of an intricate reorganization strategy outlined in the company’s Securities and Exchange Commission filing. The purpose behind these layoffs, as RE/MAX candidly declared, is to “streamline the Company’s operations and yield cost savings over the long term.”
The disclosed filing further clarifies that the comprehensive reorganization plan is anticipated to be largely executed by the close of the current quarter. The immediate aftermath of this initiative will involve a pre-tax cash charge of somewhere between $2.75 million and $3.25 million, designated for one-time termination benefits.
In the midst of this restructuring, a prominent casualty emerged within RE/MAX’s own ranks. Adam Grosshans, the firm’s principal accounting officer, found himself on the chopping block. His departure is inseparably linked to the overarching reorganization effort. In his stead, Leah Jenkins, the current executive director of financial reporting and technical accounting, ascends to the position of vice president and chief accounting officer. Jenkins simultaneously assumes the mantle of RE/MAX’s new principal accounting officer.
The company’s official statement underlines the strategic intentions behind these sweeping changes: “These measures are strategically designed so that we are better positioned to continue executing on growth initiatives for our networks and driving value for our stakeholders.” With a hint of optimism, RE/MAX acknowledges the collective potential of the RE/MAX and Motto Mortgage networks, asserting its unswerving commitment to delivering heightened value. Amidst heartfelt expressions of gratitude for departing colleagues, the company concedes that bidding farewell to team members is a challenging aspect of this process.
However, this is not the first time RE/MAX has been gripped by the throes of layoffs. Just over a year ago, the company grappled with a 17% staff reduction, amounting to around 120 employees. The consequences of this purge reverberated across the organization, particularly impacting technology workers responsible for the booj platform. The subsequent shutdown of booj paved the way for a collaboration with Inside Real Estate and its kvCORE platform.
The financial ramifications of these tumultuous times have been evident in RE/MAX’s recent performance. In the second quarter of 2023, a disheartening 10.6% year-on-year plunge in revenue to $82.4 million was recorded. In the same vein, the net income plummeted to $2 million, marking a stark decline from the $5.8 million figure recorded the previous year. The unsettling trend also infiltrated the realm of U.S. agent count, which witnessed a 6.3% year-over-year drop in Q2 2023, resulting in a count of 56,987 agents.
This series of developments underscores the significant challenges that RE/MAX has grappled with recently, placing a spotlight on its workforce reduction efforts as part of a wider strategic maneuver.