About a year ago, online retailer Packable was preparing to go public through a special-purpose acquisition company. As the SPAC market has evaporated and the economy is collapsing, 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 retailer of health, personal care and beauty products. Pharmapacks was founded in 2010 as a one-stop brick-and-mortar pharmacy in the Bronx, New York, before turning to the internet and establishing a big home on Amazon.
Last September, Pharmapacks was Amazon’s top seller in the United States, although it now ranks fifth among the site’s top sellers nationwide, according to the research firm. Market impulse.
Packable said in an employee notice Monday that it was laying off 138 people, or about 20% of its workforce, with the remaining 372 employees to be terminated when “individual wind-up responsibilities are completed.” The memo was signed by Leanna Bautista, the company’s director of human resources.
Packable failed to secure new funding that would have allowed it to remain in business, the notice said.
“We diligently researched internal and external financing options, but were ultimately unsuccessful,” the company said. “As the business has no viable financing alternative, we are now forced to cease operations, liquidate any remaining collateral and close the business, including the establishment on which you are dependent.”
Packable has already secured funding from leading 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.
In 2020, Amazon was Packable’s largest channel by far, 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. Due to Amazon’s global reach and massive customer base, many retailers rely on the company for the majority, and in some cases all, of their business.
Packable’s last year was fraught with challenges. After announcing in September its intention to merge with a SPAC – Highland Transcend Partners I Corp. — in a deal valuing the company at $1.55 billion, the market began to turn and investors lost their appetite for SPACs.
In March, compressible canceled the case to take the company public, citing “adverse market conditions”, just days before Highland Transcend’s scheduled shareholder meeting. Packable CEO Andrew Vagenas quietly resigned in April and was replaced by Daniel Myers, according to the company’s website. Myers, a former supply chain manager at Mondelez, was appointed on the Packable board last year. Vagenas still sits on the company’s board of directors, according to his LinkedIn.
Not a single SPAC was issued in July as what was left of the market completely dried up, according to CNBC’s calculations of data from SPAC Research. A boom in 2020 and 2021 created over 600 SPACs looking for targets.
For Packable, the capital’s demise represented a dramatic turning point for a business that exploded after the onset of the Covid-19 pandemic. With consumers stuck at home, online spending has surged and investors have flocked to the space.
Revenue slowed last year from double-digit growth in 2020 as the company struggled to overcome supply chain constraints, which “resulted in significant stock-outs, order delays and delays in onboarding new customers,” according to an investor presentation.
However, the business was still able to expand in early 2022. In February, Packable said his average daily income in January rose to around $1.6 million from $1.5 million in the fourth quarter of 2021.
Representatives for Packable did not immediately respond to a request for comment.
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