San Francisco • Fashion rental service Le Tote is laying off about one-third of its corporate workforce as it tries to eke out a profit in the increasingly crowded world of subscription e-commerce.
The closely held company became “too bloated” in certain areas as it pursued rapid growth, CEO Rakesh Tondon said in a phone interview. The job cuts, which impact more than 50 people, will allow the company to move toward profitability, he said. The layoffs account for about 30% to 35% of corporate staff, including workers at its San Francisco headquarters as well as some remote teams.
“Obviously, this is never an easy decision,” Tondon said. “We’re getting the company closer to profitability with this.”
Le Tote is a subscription-based service that sends customers curated clothing and accessories in a box for a flat monthly fee. When subscribers are finished using the items, they send them back and get a new shipment. Or, they can purchase standouts they want to keep forever.
Founded in 2012 alongside a wave of subscription services that send members everything from cosmetics to dog snacks, Le Tote competes with the heavyweights of subscription e-commerce. Stitch Fix Inc, a personal styling and shopping service that also sends clothes in boxes, went public last year. Trunk Club, bought by Nordstrom Inc in 2014 for US$350 million (RM1.4 billion), helps customers build wardrobes. Rent the Runway has raised more than US$190 million in funding and now offers an unlimited rental option.
Le Tote has raised US$62.5 million in venture capital funding. It’s backed by firms that include Lerer Hippeau Ventures, Azure Capital and Simon Venture Group. For now, it’s not actively seeking additional funding from outside investors, though executives may reconsider in a few months, said Tondon.
In January, Le Tote announced its expansion into China, becoming the first US-based service of its kind to enter the market. Tondon said service will continue in the region and for its domestic customers.
“For the US, all of our initiatives are going forward as planned,” he said. “It’s only on the profitability front where we have to re-evaluate.” — Bloomberg