Companies expect to reap millions of dollars in savings in the years ahead as they scale back on office space after the coronavirus pandemic emptied workplaces around the country. However, some are paying in the short term for their decision to downsize.
Online listings company
consumer loan provider
Affirm Holdings Inc.
and drug distributor
in recent weeks have disclosed one-time charges related to plans to shrink their real-estate footprint. They are among many businesses that are subletting office space, choosing not to renew leases or taking other steps to slim down after giving employees more flexibility to work from home.
Finance chiefs have spent months weighing the costs and benefits associated with getting rid of unused office space as businesses consider whether to return to the office. While companies such as Facebook Inc. are allowing some employees to work from home permanently, others, including Alphabet Inc., are asking most of them to spend a few days a week in the office. A third group of businesses—among them
Goldman Sachs Group Inc.
—is asking employees to come back to the office full time.
San Francisco-based Affirm recently announced its roughly 1,340 employees would be given a choice between working from home indefinitely and returning to the office. “Covid changed everything, and we became a remote-first company,” said
the company’s chief financial officer.
The company decided to sublease one of its two offices in San Francisco to recover some of its rent, as it doesn’t expect all employees to come back. Affirm booked a roughly $11 million charge during the quarter ended March 31 for subleasing the office, which it has rented until 2026. It continues to operate offices in New York, Chicago, Toronto, Pittsburgh and Salt Lake City.
Affirm booked $400.1 million in operating expenses, which include rent, during the quarter ended March 31, up from $219.8 million a year earlier, due in part to higher technology costs and stock-based compensation associated with the company’s initial public offering in January.
Companies book impairment charges when they sublease office space for less money than what they pay for it, according to Jonathan Milian, an…