Luggage startup Away in a Medium post on Tuesday said it is furloughing "about half" of its team and laying off another 10%. A company spokesperson declined to say how many employees are affected. The founders blamed COVID-19, which has brought travel to a standstill, for a 90% decline in sales "over the past few weeks."
Those laid off will receive a minimum eight weeks severance pay, and Away will cover healthcare benefits through June, according to the post from co-founders Steph Korey and Jen Rubio. The company has waived equity vesting requirements and extended the period when employees can exercise their stock options.
The company previously closed its 10 stores and delayed the opening of a Dallas Store in response to the outbreak; those closures have been extended. The company also had already frozen hiring, suspended the founders' salaries and reduced senior leadership pay, according to the post.
In their post, Korey and Rubio said that Away had been enjoying "a healthy profit margin on every order."
The COVID-19 pandemic is challenging global commercial airline travel to a greater extent than did the 9/11 terrorist attacks, the 2003 outbreak of SARS or the 2008 financial crisis, according to analysts at Oliver Wyman. That in turn has severely interrupted Away's momentum. "Today, the company's salary costs alone exceed our revenues many times over," the co-founders wrote.
Those consequences of the disease outbreak may be the worst to befall the 5-year-old startup, but it's not the first, even this year. Korey stepped away from her role as CEO, then stepped back in, amid accusations from some employees of a toxic work environment. Later, the company received a competitive challenge from mass merchant Target, which released a line of budget travel gear that resembles the startup's wares.
Stuart Haselden, former Lululemon chief operating officer and executive vice president of international, had been slated to take the CEO spot from Korey in January amid controversial media reports. Although Korey has returned, he remains as co-CEO.
Last year, the company collected $100 million in Series D funding, raising its valuation to $1.4 billion. However, companies with such so-called "unicorn status" have been taken down a notch as the realization that many of them are unable to sustain, or, in the case of Casper so far, even achieve profitability. The brand's struggles could also spell trouble for other direct-to-consumer brands in areas hit hard by the coronavirus outbreak, as most rely on one key vertical to drive sales.