Joining the growing number of e-commerce companies that have been forced to cut costs amid the ongoing dot-com shakeout, Garden.com (Nasdaq: GDEN) announced Thursday it will lay off 93 employees, or about 40 percent of its workforce.
The company also said it expects to fall short of revenue predictions and is restructuring its operations. Refusing to close its site at this point, Garden.com has hired investment bank Robertson Stephens to assist in fundraising efforts.
Garden.com expects that its first quarter revenues will be in the range of $2.3 million to $2.5 million (US$), compared to analysts’ estimates of approximately $3.3 million to $3.7 million. First quarter revenue for the same period in the prior year was $1.4 million.
The company anticipates that its net loss in the first quarter will be in the range of $10 million to $11 million, or approximately 57 to 62 cents per share.
Time to Trim
“After reviewing the funding options available to us at this time, we found that the current cost of capital was unacceptable to continue to fund the growth and operating plan we have been executing on for the past year,” commented Garden.com president, CEO and co-founder Cliff Sharples.
Sharples added, “We made the tough decision to reduce our workforce, so that we could refocus our energies, and evolve our business model to more accurately reflect existing market conditions.”
Garden.com offers plants, gifts and gardening tips. The Austin, Texas-based e-tailer made its initial public offering in September 1999.
Critics have maintained that after adding shipping costs, Garden.com’s products are not cheaper than local retail outlets.
More Layoffs for Dot-Coms
Garden.com is not alone in handing out pink slips. Earlier this week, MTVi announced that it was laying-off one-fourth of its staff, or 105 people. Also this week, Internet services company Xpedior, Inc. said that it is cutting about 16 percent of its employees, or 270 people.
Last week, AltaVista said that it will slash 225 jobs, or 25 percent of its staff. Health care site WebMD also said that it is trimming its work force by 1,100 jobs or about 18 percent.
Gene Alvarez, program director with electronic business strategies for MetaGroup, said this year is likely to be a tough holiday season for pure-play Internet companies.
“As much as half to two-thirds of these could be gone by early next year,” he said. “You will see a real blood bath of pure plays in the first part of 2001.”
Alvarez added, “1998 was the year of the pure-play Internet companies. In 1999, the brick-and-mortars fought back with their own e-commerce initiatives and this year you’ll see them begin to take over the e-commerce market.”