Buy.com slashes workforce as sales plummet
- 17 August, 2001 08:31
Embattled online retailer Buy.com, which late last week agreed to a buyout offer from its founder, yesterday disclosed plans to lay off 40 percent of its workers and said second-quarter revenue was less than half of what the company reported for the same period a year ago.
About 50 employees are being let go as part of the layoffs, which follow a cutback announced last February in which Buy.com dismissed 125 of the 256 workers it had at the time. Those cuts were preceded by the resignations of the Aliso Viejo, California-based retailer's chief executive officer (CEO) and chief financial officer (CFO) and by a sharp reduction in the number of products it sells.
Buy.com did US$787.7 million worth of business last year and was the second-largest online retailer in the U.S., behind Seattle-based Amazon.com Inc. But like many other e-commerce ventures, including Amazon, Buy.com has been hit hard by lower-than-expected sales -- a situation that didn't change in the second quarter.
The company said second-quarter revenue came in at $94.9 million, down 51 percent from the year-earlier total of $193.2 million. It reported a net loss of $5.7 million for the quarter, compared with a $33.6 million deficit a year ago. But Buy.com said its cash holdings and marketable securities dropped $19.2 million during the quarter, leaving it with just $14.5 million on hand.
Under the buyout deal announced last Friday, an investment firm owned by company founder Scott Blum plans to purchase Buy.com for just $23 million in cash. Blum will also immediately provide the retailer of computer and electronics products with interim financing of up to $9 million as part of the agreement.
In a further blow, Buy.com said Monday that its stock had been delisted by Washington-based Nasdaq Stock Market Inc. The delisting decision followed a hearing that Nasdaq officials held on the matter last month.