About a year ago, online retailer Packable was preparing to go public through a special purpose vehicle. With the SPAC market evaporating and the economy now sputtering, Packable is laying off staff and preparing to liquidate, according to internal documents reviewed by CNBC.
Packable is the parent company of Pharmapacks, an online seller of health, personal care and beauty products. Pharmapacks was founded in 2010 as a single brick-and-mortar pharmacy in the Bronx, New York, before turning to the internet and making a big home on Amazon.
Last September, Pharmapacks was the No. 1 seller on Amazon in the U.S., though it now ranks fifth among the top-selling sites nationwide, according to research firm Marketplace Pulse.
Packable said in a notice to employees Monday that it was laying off 138 people, or roughly 20 percent of its staff, with the remaining 372 employees expected to be terminated as “individual severance responsibilities have been met.” The memorandum was signed by Liana Bautista, the company’s CEO.
Packable was unable to secure new financing that would have allowed it to remain in business, the notice said.
“We diligently pursued internal and external funding opportunities but were ultimately unsuccessful,” the company said. “Given that the company has no viable financing alternatives, we are now forced to cease operations, liquidate all remaining collateral and close the business, including the facility to which you report.”
Packable has already secured funding from high profile investors including Carlyle Group, Fidelity and Lugard Road Capital. In addition to Amazon, the company sells products on marketplaces operated by Walmart, eBay and Target.
As of 2020, Amazon was by far Packable’s largest channel, accounting for 80% of sales, according to an investor presentation. Amazon’s third-party marketplace has become the centerpiece of its dominant e-commerce business, as it now accounts for more than half of online retail sales. Because of Amazon’s global reach and massive customer base, many retailers rely on the company for most, and in some cases, all of their business.
Packable’s last year has been filled with turbulence. After announcing in September plans to merge with SPAC — Highland Transcend Partners I Corp. — in a deal that valued the company at $1.55 billion, the market began to turn and investors lost their appetite for SPACs.
In March, Packable called off the deal to take the company public, citing “adverse market conditions,” just days before Highland Transcend’s shareholders were to meet. Packable CEO Andrew Vagenas quietly resigned in April and was succeeded by Daniel Myers, according to the company’s website. Myers, a former supply chain executive at Mondelez, was appointed to Packable’s board last year. Vagenas is still on the company’s board, according to his LinkedIn.
No SPACs were issued in July as what remained of the market dried up completely, according to CNBC’s calculations of SPAC Research data. The boom in 2020 and 2021 created more than 600 SPACs looking for targets.
For Packable, the disappearance of capital represents a dramatic turnaround for a business that has thrived since the start of the Covid-19 pandemic. As consumers stayed home, online spending soared and investors poured into the space.
Revenue slowed last year from double-digit growth in 2020 as the company struggled to deal with supply chain constraints, which “resulted in significant out-of-stocks, delays in purchase orders and delays in onboarding new customers.” , according to an investor presentation.
However, the business still managed to grow somewhat in early 2022. In February, Packable said its average daily revenue in January increased to approximately $1.6 million from $1.5 million in the fourth quarter of 2021 Mr.
Packable representatives did not immediately respond to a request for comment.
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