Carvana will lay off about 2,500 employees, or 12% of its employees, the company said Tuesday, as the online used-car retailer works to regain profitability just weeks after reporting disappointing results.
The epidemic provided a perfect opportunity to brighten up Carvana’s online business model, while industry deficits also forced the company to burn through cash to acquire inventory.
Shares of the company, best known for its automatic car vending machines, traded down 1% at $ 38.43 in the afternoon trade. They have lost more than 50% since raising $ 1.25 billion in an equity offer last month.
Carvana has missed revenue expectations over the past three quarters as spending has risen and demand for used cars has fallen due to skyrocketing prices and inventory deficits.
The agency said in a securities filing on Tuesday that it plans to remove operations from its inspection center in Euclid, Ohio, and several logistics hubs.
The move will help Carvana restore a good balance between its sales volume and the level of stuffing, it added.
The Tempe, Arizona-based caravan had 21,000 full-time and part-time employees as of the end of Dec. 31, according to the latest annual filing.
Carvana said Tuesday that all affected team members, initially in the operational group, will receive four weeks’ salary and one extra week for each year they stay with the company.
The company said in a statement that its executives would leave the company for the rest of the year.
Earlier on Tuesday, Carvana closed a deal for a গ্রহণ 2.2 billion acquisition of Carmel-based KAR Global’s U.S. physical auto auction business, ADESA.
(Reporting by Nathan Gomes in Bangalore; Editing by Shailesh Kuber)