Zulily to lay off undisclosed number of employees amid sales slump

Dive Brief:

Zulily on Thursday confirmed that it’s making organizational changes that entail an undisclosed number of layoffs, according to an email from a company spokesperson to Retail Dive.
"At Zulily, we’re always testing, learning, and innovating to provide a differentiated experience to our customers," the spokesperson said. "On Wednesday, we announced to our team members organizational changes designed to accelerate focus and growth in areas of innovation that will help us best meet the evolving needs of our customers and other key stakeholders. Unfortunately, this restructuring comes with team member impact. Impacted team members will be provided with support for their transition."
The statement followed a report from GeekWire citing an internal memo to employees from Zulily CEO Jeff Yurcisin, who said the company had arrived "at a critical inflection point in our business" that necessitates "streamlining our Merchandising and Studio organizations." According to GeekWire, an undisclosed number of layoffs happened at the company's Seattle and Columbus offices.

Dive Insight:

Zulily faces declines amid what Qurate Retail CEO Mike George in a May statement on the company's first quarter called "a changing retail and media landscape." Qurate (until last year "Liberty International," which also owns broadcast retailer QVC), bought the flash sales apparel site in 2015 for $2.4 billion.

The flash sales model enjoyed a brief popularity surge around the Great Recession, but has since mostly fallen out of favor. In its most recent quarter, Zulily revenue fell 5% to $397 million, according to a Qurate press release. "In Q1, our performance was disappointing, led by sales declines at QXH and zulily, both of which were down significantly," George told analysts in May, according to a Seeking Alpha conference call transcript. The declines were particularly steep "among new and occasional customers, while sales from our high-value customers increased modestly," he also said.

Decreased marketing effectiveness, including a dip in email marketing, plus state sales tax collections drove the decline, he said. To return to growth at Zulily, the company is shifting its marketing by boosting its app, where George said customers are "more engaged and valuable"; improving the customer experience, by adding more "fresh products," easing returns and enhancing curation; and expanding globally.

"We generated at Zulily about 6% of sales outside of the US in Q1 shipping to seven markets, and since the beginning of April, we've begun shipping to another 20 markets and this month we'll add another 46 countries," George noted, but also warned that "this will be a multi-quarter process with tough comps along the way."