Carvana will lay off about 2,500 employees, or 12% of its workforce, the company said on Tuesday, as the online used-car retailer works to get back to profitability weeks after it reported dismal results.
While the pandemic offered a perfect opportunity for Carvana’s online business model to shine, industry shortages also forced the company to burn through cash in order to acquire inventory.
Shares of the company, best known for its automated car vending machines, pared losses to trade down 1% at $38.43 in afternoon trade. They have lost more than 50% since raising $1.25 billion in an equity offering last month.
Carvana has missed expectations for earnings in the last three quarters as expenses soared and demand for used cars slipped due to sky high prices and inventory shortages.
The company, in a securities filing on Tuesday, said it plans to move operations away from its inspection center in Euclid, Ohio and a few logistics hubs.
The move will result in Carvana restoring a better balance between its sales volumes and staffing levels, it added.
Tempe, Arizona-based Carvana had over 21,000 full-time and part-time employees at the end of Dec. 31, as per its latest annual filing.
Carvana on Tuesday said all impacted team members, primarily in operational groups, would receive four weeks of pay and an additional week for every year that they have been with the company.
The company also said that its executive team would forego their salaries for the remainder of the year.
Carvana earlier on Tuesday closed a deal to acquire Carmel-based KAR Global’s U.S. physical auto auction business, ADESA, for $2.2 billion.
(Reporting by Nathan Gomes in Bengaluru; Editing by Shailesh Kuber)
Source: www.autoblog.com