Internet retailer Buy.com (OTC: BUYX) said Tuesday it has cut 50 workers — approximately 40 percent of its total workforce — as it reported sharply lower sales figures for the second quarter of 2001.
Buy.com said the layoffs took place Monday from its Aliso Viejo, California headquarters. The latest job cuts come on top of the firing of 125 workers in February as part of a restructuring plan.
Since the beginning of the year, Buy.com’s workforce has shriveled from 230 workers to about 65.
Buy.com’s stock was officially delisted from the Nasdaq stock exchange Monday, a move that had been expected since earlier this year. Buy.com’s shares now trade as an over-the-counter bulletin board stock.
On August 10th, founder Scott A. Blum announced he would buy back all outstanding shares of Buy.com for 17 cents each, or a total of about US$23 million.
Blum, who led the e-tailer to a $209 million initial public offering in February 2000, also plans to provide Buy.com with $9 million in short-term financing.
Buy.com saw total sales drop sharply for the quarter ended June 30th, to less than half of what they were a year before. The e-tailer posted revenues of $94.9 million for the quarter, compared to $193.2 million for the same period in 2000.
On the brighter side, Buy.com was able to sharply reduce its financial losses, trimming its loss in the second quarter to $5.7 million, or 4 cents per share, compared with a loss of $33.6 million, or 26 cents, a year ago. Buy.com said the job cuts will save the company $4.3 million over a year’s time.
Buy.com also pointed to other improvements in its second-quarter report, including an increase in the number of repeat customers to 70 percent of all sales, an uptick in gross margin and a 38 percent reduction in operating expenses.
Buy.com said it has $14.5 million in cash on hand, a decrease of more than $19 million from a year ago. But the e-tailer blamed most of that drop on sponsorship payments it made to golf’s PGA Tour.
Buy.com has sued the PGA for breach of contract, alleging that the golf tour violated the sponsorship agreement by linking with USA Networks. Buy.com is seeking $45 million from the tour. A trial is scheduled to begin in December.
Meanwhile, Buy.com itself and the underwriters of its IPO have also been sued by shareholders.
Despite its dropping sales, Buy.com has continued to win praise for its selection and customer service. In June, PC World Magazine named Buy.com the “best e-commerce site,” while Computer Shopper Magazine called it the “best overall place to buy” in January.
However, while it has cast a wide net and moved to become an all-purpose electronics retailer — offering one million different products on its site — Buy.com said that more than 80 percent of all sales during the second quarter were of computer hardware and software.