A year ago, online retailer Packable was preparing to go public through a special-purpose buyout company. As the SPAC market evaporates and the economy falters, Packable is laying off employees 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 single brick-and-mortar pharmacy in the Bronx, New York, before turning to the Internet and establishing a large home on Amazon.
Last September, PharmaPax was Amazon’s No. 1 in the U.S., though it’s currently the fifth best-selling site nationwide, according to researcher MarketPlace Plus.
In an announcement to employees on Monday, Packel said it was laying off 138 people, or roughly 20% of its workforce, and that the remaining 372 workers are expected to be terminated “as individual wind-down responsibilities are completed.” The memorandum was signed by Liana Bautista, the company’s chief executive officer.
Packel was unable to secure new financing to keep it in business, the announcement said.
“We have diligently pursued internal and external financing options but have been unsuccessful,” the company said. “Since the company has no viable financing options, we are now forced to cease operations, liquidate the remaining collateral, and close the business, including the facility you report.”
It has secured funding from high-profile investors including Carlyle Group, Fidelity and Lugard Road Capital. In addition to Amazon, the company sells through marketplaces operated by Walmart, eBay and Target.
In the year As of 2020, Amazon is by far Packable’s largest channel, accounting for 80% of sales, according to the investor. Amazon’s third-party marketplace has become the centerpiece of its core e-commerce business, as it now accounts for more than half of online retail sales. Because of Amazon’s global reach and large customer base, many retailers count on the company for most, and in some cases, all of their business.
Pakel’s past year has been tumultuous. In September from SPAC – Highland Transcend Partners I Corp. After announcing plans to merge with the company in a deal valued at $1.55 billion, the market began to turn around and investors lost interest in SPACs.
In March, Pacable pulled out of a deal to take the company public, citing “difficult market conditions,” just days before Highland Transcend’s shareholders were scheduled to meet. Packable CEO Andrew Vaughans resigned quietly in April and was replaced by Daniel Myers, according to the company’s website. Myers, a former supply chain executive at Mondelez, was named to Pacel’s board last year. Vagenas still sits on the company’s board, according to LinkedIn.
Not a single SPAC was issued in July as what remained of the market dried up, according to CNBC’s SPAC Research data calculation. In the year Growth in 2020 and 2021 created more than 600 SPACs hunting targets.
For a packaged, capital loss, it represents a dramatic turnaround for a business that has flourished since the outbreak of the Covid-19 pandemic. With consumers stuck at home, online spending increased, and investors poured into the space.
Revenue fell from double-digit growth last year in 2020 as the company struggled to navigate supply chain constraints, which led to “significant inventory off the market, delays in purchase orders and delays in onboarding new customers,” according to the investor.
However, the business still managed to grow some in the first part of 2022. In February, Packable said its average daily revenue in January was expected to be $1.6 million in the fourth quarter of 2021, up from $1.5 million.
Representatives from Packable did not immediately respond to a request for comment.
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