StepStone shuts down UK office, cuts back in Europe
More than 500 staff axed
Online recruitment agency StepStone has shut down its UK office with the loss of 135 jobs and pulled back in Norway, Sweden, Finland, Netherlands and Luxembourg to the tune of 526 jobs. The decision comes on the same day that StepStone released its Q3 results and announced a new CEO.
An announcement on the company's site reads: "The Board has commenced a major reorganization of the StepStone business with the objective of accelerating the company's move to profitability and cash generation. Over the last two years the company has built a strong pan-European brand and established itself in 17 countries across Europe. At the end of Q3 it had a headcount of 876.
"Whilst a number of these country units are now EBITDA positive losses and cash deficits are being incurred in other countries. The company's cash position, together with the current status of the financial and business markets, have lead the Board to decide that the company cannot sustain the current level of investment across Europe. Therefore it has decided to reorganize the business around the best performing countries, exit a number of markets in which it continues to be loss making or require substantial continued investment to achieve profitability.
"The company will also be substantially reducing its headquarters functions and moving to a regionally based business model. As a result of this plan, the intention is that the headcount will be reduced to less than 350."
The company will continue to run skeleton operations in all European countries, except the UK, which the company singled out for its "disappointing" results. The posting reads: "[StepStone] has also informed its subsidiary in the UK that it will not continue to provide it with financial support." A company spokesman confirmed that the liquidators had been sent in this morning. Staff will not receive a redundancy payout.
The company was known to be in trouble in July, when it had €46.9 million in the bank but operating expenses of €47.8m, against revenues of €17.1m. It now has €22.5 million in the bank with revenue down to €13.4 million.
Today's posting warns that if this round of cost-cutting fails to work, the whole company may go into liquidation: "It is the Board's opinion today that the actions taken to date will ensure that the current cash and cash equivalent balance is sufficient to allow the company to complete the planned fund raising process and continue to trade as a going concern during that process. However, if sufficient funds are not forthcoming within the planned timescale the company will be unable to continue trading as a going concern."
StepStone has built itself a big brand name across Europe but at enormous cost. In the UK, it has spent a small fortune on TV advertising - which has rarely proven to be effective at getting people to Web sites - as well as having sponsored a whole range of TV programmes. The UK Web site now has nothing but a graphic and the message: "Site currently down, more information soon."
If you want to learn more, go here.