Fab is focused on being profitable and self-sustainable as soon as possible. That scenario is well within our reach with our existing financing if we follow an extremely thoughtful and disciplined path to profitability.
A constantly improving cost structure is critical to providing our customers with constantly improving benefits. Fab is investing tens of millions of dollars in developing and acquiring fresh merchandise for our customers at amazing prices, backed by our smile guarantee. To pay for that, while accelerating our path to profitability, we’ve made the tough but correct decision to eliminate positions that are either legacies of our former flash-sales business model or are part of current processes that can be managed with innovative technology and fewer people. The layoffs will affect almost every department at Fab but it is not an across-the-board cut, rather it reflects the strategic direction of our business.
In total the layoffs affect 101 people worldwide, including 84 people from our New York headquarters. Following these actions Fab will have 440 full time employees. As noted, not every group at Fab will be impacted. In particular, our Crackerjack customer service team, our merchandize planning, and our technology groups will remain fully in place. We are also hiring people for our private label sourcing team in New York and to grow our 50-person Fab Designed By You (Fab DBY) custom-furniture group that continues to operate out of our Berlin office.
I acknowledge that sometimes our near-term decisions may not always make immediate sense externally. This is not one of those times. The impetus behind this decision is our plan to accelerate Fab’s path to profitability. We are certain that driving towards a profitable Fab in the near-term is the way to build the best Fab for the long-term benefit of our customers.
Here is a link to a letter I recently wrote to our team at Fab. It is designed to educate everyone and anyone who reads it with a thorough understanding of how Fab is going to fulfill our long-term vision.
Doing the right thing for Fab encompasses doing the right thing for our people who will lose their jobs. Affected employees will receive severance packages that reflect the amount of time they’ve spent working at Fab. We are also enabling every laid-off employee to walk away with vested stock options. Our goal is to ensure that compassion infuses every interaction with those who will be leaving Fab.
This decision makes immediate and valuable sense for our customers and our business overall. We face the future of Fab with a justified optimism, confidence, and belief in the strength of our offering and our plan. Our enthusiasm for the future is infused with empathy, gratefulness, and support for those friends and colleagues who will be leaving us.
It’s not easy to say goodbye to a lot of people who helped create this amazing Fab journey. I know that a lot of tears were shed today. Our close Fab culture and the passion our team shares for brightening peoples’ lives with design makes moments like this even harder than they might be at most companies. To the Fab team from Bradford, our management team, our Board of Directors, and myself: Thank you from the bottom of our hearts for your tireless efforts at making people smile.