Buy.com slashes workforce as sales plummet
- 17 August, 2001 10:05
Embattled online retailer Buy.com, which late last week agreed to a buyout offer from its founder, yesterday disclosed plans to lay off 40 per cent 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 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 $US787.7 million worth of business last year and was the second-largest online retailer in the US, behind 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 per cent 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.