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List, a UK fashion e-commerce site that raised funding at a $700 million valuation last year, is the latest tech startup to rein in costs by cutting staff. TechCrunch has learned that the company is in the process of laying off 25% of its workforce, laying off around 50 people, as part of a major restructuring to conserve cash flow and move towards profitability.
The details were first leaked to us via an internal memo from CEO, Emma McFerran, who took over the CEO role from founder Chris Morton in July of this year. The company then confirmed the details to us. It is not clear which departments will be most affected, but the memo notes that around 85 people who will be ‘affected by this exercise’ are being approached.
We understand from sources that the company had plans for an IPO next year but is now pushing back and may be looking for another round of funding to shore up its finances.
List last raised money in May 2021, when the picture for e-commerce was rosy, often an ironic bright business spot in the otherwise devastating Covid-19 pandemic: fashion retailers in particular were seeing record-breaking revenue and business growth online. Because consumers avoid shopping in person and use disposable income they no longer spend on going out. That made for buoyant sales, as well as very bullish forecasts: Consumer shoppers, observers said, are unlikely to “go back” to physical purchases in the same numbers even after the pandemic subsides.
The list was a product of that: When it announced its $85 million raise, it planned to raise its last fund before the IPO, which it was planning for London or New York as soon as this year.
At the time it said it had 150 million users and cataloged 8 million products from 17,000 brands and retailers. That list of brands includes high-end labels such as Balenciaga, Balmain, Bottega Veneta, Burberry, Fendi, Gucci, Moncler, Off-White, Prada, Saint Laurent and Valentino and engages with an active audience of shoppers. Company for strong growth. In 2020, the total business value on the list was over $500 million. Between then and 2021, the number of new users increased by 1100% and GMV was over $2 billion by the time the round was announced.
Fast forward to today, and the most optimistic and bullish predictions in e-commerce have failed to materialize: online sales haven’t kept up with sharp growth, and people typically aren’t spending as much of their wallet share online with returns. To shop in store.
This has led to some business contraction across the board. Amazon, the largest of all e-commerce operations (which is working to build a strong line in fashion) may lay off as many as 10,000 staff and is cutting back on many product lines. Lyst’s more direct competitor, high-end fashion e-commerce poster child Farfetch, currently has a market cap of just $2.9 billion, a big drop from the $14 billion it commanded in May 2021.
Many see the holiday season as a critical indicator of how well e-commerce companies are doing in the current economy, and the numbers so far this year actually aren’t as bad as they thought: Adobe’s sales tracking shows. Big days like Black Friday and Cyber Monday are both breaking sales records (over $9 billion and $11 billion, respectively).
The list itself is seeing strong sales to kick off holiday shopping, with its most profitable Black Friday weekend ever, up 15% in average order value — albeit with more discounting at brands and stores selling on the site to boost activity.
But the big picture and long-term view are the factors driving today’s news. In addition to the focus on becoming profitable, our source tells us that List’s IPO was recently targeted for 2023, but those plans have now been pushed back; And it wants to do a new round of funding in part because it’s running low on cash flow. (To be clear, the company will not comment on these facts.)
We’ll update this post as we learn more.
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