Lot18, the membership-based luxury item site that raised a whopping $45 million over the last year, just laid off 14 people, or 15 percent of the staff.
“A lot of this is a natural part of the way a business grows and evolves,” Lot18 founder Philip James told Betabeat. “Some positions aren’t needed. At the same time, we’re hiring heavily in areas that do make sense for us. This puts us back to October’s level, so just a couple months ago.”
The company was planning to slash a significant part of its workforce tomorrow morning, followed by a company-wide meeting. After Betabeat began inquiring, the company confirmed the layoffs and pushed them up to this afternoon.
Lot18 specializes in wine and gourmet food, as well as cultural activities and amusements, similar to Gilt Taste. The site was growing explosively, most recently with its $30 million series C in November, with backing from big names like Accel Partners, FirstMark Capital and the founders of Diapers.com. Lot18 also recently acquired Paris based-Vinobest and made some high-profile hires, including venture vet Mark Pinney as CFO and Gilt VP of marketing Andrew Koch as VP of product.
Back in December, Betabeat wrote this on the announcement of Lot18’s expansion into Europe:
The company’s co-founder and president, Philip James, is already talking about profitability, telling Xconomy that is has plenty of capital on hand and will not look to jump into many different verticals…
In the year since its launch lot 18 has grown from 6 to 90 employees and seen 13 straight months of growth.
Color us boosterish! Despite the layoffs, Mr. James said sales were great. “Our 2011 performance was way higher than we’d projected originally,” he said. But Lot18 still had to shed some bloat, which apparently included its vice president of operations, director of operations, and compliance manager.
A Lot18 spokesman echoed Mr. James, saying the layoffs bring the company back down to 72, the same headcount as it had in October. “2011 was a very robust year for us, and the actions of today just put us on a clearer path toward profitability,” the spokesman said.
Mr. James said he expects Lot18 will be back up to 96 employees in a few months. (Déjà vu: Gilt Groupe CEO just said the same thing after layoffs at the luxury discounter.) Lot18 is still hiring in the U.S. and Europe, just for a different mix of positions, he said.
Lot18 analogues Gilt and RueLaLa both recently announced mass layoffs; even American Apparel got hit by a Groupon coupon. Meanwhile, design-centric flash sales site Fab.com still seems to be on the rise. Is the flash sale business model a flash of brilliance, or a flash in the pan?
Mr. James said even though Lot18 took a lot of money, he’s still got his eye on the prize: profitability. “We raised a lot of money both recently in pretty rapid succession in less than 12 months,” he said. “We have a really healthy balance sheet. We’re certainly not looking for money for a long time and potentially not looking for money ever again.”