Beleaguered e-tailer Buy.com (Nasdaq: BUYX) announced Wednesday that it is eliminating approximately 125 positions — more than half of its 230-person staff — in a bid to conserve cash.
The Aliso Viejo, California-based company said the job cuts, and a plan to significantly reduce expenses related to “certain outsourced services,” would cut the company’s cash expenses by approximately US$29 million on an annual basis.
These actions, along with other cost cutting measures already in place, are expected to reduce operating expenses by approximately $70 million annually.
“We had to make difficult decisions in order to advance our goal of becoming profitable,” said Buy.com chief executive officer James B. Roszak. “To that end, we have identified areas within our operating structure where we are able to streamline our business and reduce our cash operating expenses.”
In addition to the layoffs, Buy.com’s restructuring plan includes exiting the golf business acquired from Buygolf.com and closing Buy.com’s sports store.
Savings and Losses
As a result of the restructuring, the company expects to record a pre-tax charge in the range of $32 million to $37 million in the first quarter of 2001.
Buy.com also said that the restructuring plan would change the guidance provided this month in respect to its 2001 operating plan, but did not provide specifics.
Buy.com has ranked as high as second in the U.S. to Amazon.com in online sales and has won praise from customers and high marks in online polls. However, it has not done well financially. Since going public last February, Buy.com has seen its stock price slip steadily from $35 per share to barely above $1.
Open and Shut
Last month, Buy.com said that revenue for the fourth quarter ended December 31st slipped 2 percent from a year earlier, to $196.7 million.
The company lost $27.4 million, or 20 cents per share, before extraordinary items, compared with a loss of $40.9 million, or 44 cents, in the year-earlier quarter.
In the past year, Buy.com has opened — and then shut — e-tail operations in three countries. In addition to selling its U.K. operations, the company recently shut down its operations in Canada and closed its Australian division.
Additionally, the company’s chief executive officer and chairman of the board Gregory Hawkins and chief financial officer Mitch Hill resigned for unspecified reasons in February.
At the time, Morningstar.com analyst David Kathman told the E-Commerce Times he was “certainly not very optimistic” about the company’s prospects for survival.