Bengaluru-based home design and decor service provider Livspace has laid off 15% of its total workforce i.e over 450 employees out of a total of 2,800. The development comes nearly a month after the company said that it hasn’t done any Covid-19 related pay cuts or layoffs, but the impact of extended lockdown has now led the company to resort to layoffs.
Talking to Inc42, Livspace cofounder and CEO Anuj Srivastava said that the company had to announce downsizing measures on Monday morning to the employees. About 15% of the organisation has been impacted due to this decision across central teams and other teams like sales, business development etc.
Srivastava said that the company is offering a month’s notice and severance pay, along with an assistance package, as part of which every employee will receive a portion of their pay. He added that the company may have to look at salary adjustments if the situation prolongs.
The company founded in 2014 by Anuj Srivastava, Ramakant Sharma and Shagufta Anurag offers end-to-end home design experience for homeowners and home designers. Livspace Group has three entities – Home interior, e-homemaker and Livspace Pte.
The company has earlier raised $157.6 Mn in funding from investors such as US-based venture capital firm TPG Growth, Goldman Sachs, Jungle Ventures, Bessemer Venture Partners and Helion Ventures as well as furniture retailer IKEA. It was said to be on its way to join the unicorn club with its Series D funding.
Srivastava explained that even though both founders have let go of 70% of their salary, and despite bonus cuts for the leadership team and success-based variable pay across the board, more measures would be needed to overcome the slowdown. “Due to the Covid-19 pandemic, like every business in the discretionary purchase sector, Livspace also has experienced a sudden and unpredictable impact on business. Our experience centres and last-mile operations have been impacted due to the lockdown and as the lockdown opens up, we are also restarting our operations,” Srivastava told us.
He added that the company sees a more unpredictable recovery path, with the conditions still being very unstable, and the focus is on taking a leaner direction. Srivatsava also said that the company has cut almost 25%-30% of its expenses to stretch runway.
Livspace CEO added that with the amount of capital that it has in the bank, it is projecting profitability and will be “able to manage its destination”. “So we are fortunate to be well-capitalized, and to be able to project profitability at this point in time, so it’s not a question of 18 to 24 months at this point in time for us,” Srivastava added.
The cofounder said that over the past two months, the company has slashed marketing and branding expenses to almost zero. The company is now working on building its tech platform, investing more in category and supply chain, and prioritise the growth opportunities.
During the lockdown, Srivastava said that the company hasn’t been able to deliver its services, but has seen good engagement with users who are connecting with the company’s designers to work on their homes. “So at this point in time, we are really making sure that the business that we have, we can convert and deliver that into hopes, starting with Bengaluru and Gurugram and as more cities open up, we will continue to deliver the best possible customer community experience,” he added.
Srivatsava also said that the company has seen 90%-100% growth in topline in FY20, the year ending March 31, 2020. In FY19 on a consolidated basis, Livspace’s revenue was INR 191 Cr, with expenses of INR 349 Cr leading to losses of INR 158 Cr. In context, for FY18, the company’s consolidated revenue was INR 105 Cr, with expenses of INR 206 Cr and losses of INR 101 Cr.