Letsbuyit cans 60 staff, shuts offices
Stiffed on funding, sales way down
Lazarus style Internet retailer Letsbuyit.com is laying off 60 staff and shutting its offices in the UK and France.
Sales are down by more than 50 per cent in the first half of 2001, compared with 2000, but that is not surprising. The company shut up shop for two months to get protection from its creditors and to raise funding. Then when it re-opened, with fewer product lines in fewer markets, some of the funding didn't come through.
Sales in the first half were 4.2 million euros (£2.64 million), down from 11.2 million euros (£7.04 million) in the first half of 2000. In a statement regarding the interim results, Letsbuyit said: "It is important to note that H1 2001 earnings are not directly comparable to the figures reported for the same period in 2000. The major differences were that, during the first half of the current year, the websites were not in operation until 26 February and only served customers in four countries."
"Moreover, the Company's planned growth rate in the first half was adversely affected by the non-availability of funds needed to finance investment in current assets."
Letsbuyit feels it's been stiffed by Shmulik Stein International Investments which it says promised it 30 million euros (£18.86 million) in three payments. Letsbuyit has now started legal proceedings against SSII, because all it got was a 3.3 million euro (£2.07 million) pay off. SSII's move also meant another investor didn't have to come through with the money it promised.
Letsbuyit got into trouble last year and filed for protection from its creditors on 29 December 2000, and didn't start selling stuff again until February. It now only trades in Germany, UK, France and Sweden. Its also trimmed its product lines down to high margin IT goods, consumer electronics, white goods and domestic appliances.
It's says its also started charging customers for delivery - which wouldn't have been unreasonable from the start.
Other ways its found to save the business are slashing sales and marketing expenses. So no more TV campaigns. In the first half of 2000 it spent 42.2 million euros (£26.54 million), in H1 2001 this was down to 5.3 million euros (£3.33 million)
The real lifesaver for the group buying business is a tie up with mega-retailer KarstadtQuelle. Letsbuyit gets Karstadt's buying power and logistics skills, Karstadt gets the rights to buy the Letsbuyit trademark and a stake in the business. Hang on, that's not a lifesaver, that's being taken over. Probably on the cheap.
Meanwhile all of Letsbuyit's European web sites will be co-ordinated from Germany; the operational side of the business will be run from Germany and Sweden.
Letsbuyit's Q2 financials
Letsbuyit statement on shutting offices