Garden.com cuts 93 jobs


Friday, September 29th 2000, 12:00 am
By: News On 6


Garden.com Inc. has laid off nearly a third of its staff and hired investment-banking firm Robertson Stephens Inc. to help raise cash and explore other alternatives.


The Austin-based online retailer, which sells gardening products, also warned Thursday that revenue for its first fiscal quarter ending Sept. 30 will be lower than Wall Street's expectations.


Shares in Garden.com fell 31 cents, or 23 percent, to close at $1.06 Thursday on the Nasdaq market. The stock has fallen 88 percent this year, as market euphoria over the future prospects of Internet retailers turned into impatience over their sustained losses.


With its 93 layoffs, Garden.com joins a host of other dot.coms that have been letting workers go in a scramble to cut costs and turn profitable.


"We found that the current cost of capital was unacceptable to continue to fund the growth and operating plan we have been executing on for the past year," Cliff Sharples, president, chief executive and co-founder of Garden.com, said in a conference call.


A separate announcement Thursday offered a strong hint of where management believes the future value of the company may lie.


Garden.com said it is launching a new division that will commercialize Trellis, the company's virtual supply-chain software.


With Trellis, Garden.com can ship products to customers directly from suppliers – a significant capability for time-sensitive shipments such as live plants. Lowe's Home Centers Inc. said it would use Trellis for its retail and e-commerce businesses.


"What do dot.coms have to offer? The time they've put into developing software that focuses on specific problems associated with their categories," said Steven Vonder Haar, an analyst at the Yankee Group, a market research firm based in Boston.


E-tailers that want to be purchased by established brick-and-mortar retail chains need to offer either an established customer base or some kind of "secret sauce" technology, he said.


Garden.com said its revenue in the quarter ending Saturday is expected to be in the range of $2.3 million to $2.5 million, compared with analyst estimates of between $3.3 million and $3.7 million.


In the same period a year earlier, revenue for the quarter was $1.4 million. Garden.com said it expects to report a loss for the quarter of between $10 million and $11 million, including a restructuring charge of $2.5 million to $2.8 million.


Job cuts at dot.com businesses were up 15 percent in September, compared with August, according to a report released Monday from Challenger, Gray & Christmas Inc., an outplacement firm.