January 30, 2001, 5:16 PM

Ebags cuts 25% from workforce

Don Davis

Editor in Chief

Greenwood Village, Colo.-based eBags passed out pink slips to 22 employees, or about one-quarter of its staff, last week. The company cited a need to streamline operations so as to speed up the path to profitabilityÐthus enhancing its prospects for additional financing in increasingly tough capital markets. The layoffs cut across all departments, leaving 66 employees on the payroll. "The current climate, especially in terms of raising money, has gotten to be more demanding about getting to profitability sooner," says Peter J. Cobb, vice president of marketing and a company co-founder. "A move like this can extend the runway. Some companies are falling by the wayside, including a lot of excellent ones. If we can outlast the Garden.coms and the Pets.coms, that says something about how weÕre managing the business as well as the cash side." EBags shipped its 1 millionth bag in December after less than two years of operation. The company, whose sales have been estimated at from $5 million to $10 million, recently reported that six-months sales were up 135% over the same period a year ago, rising on a marketing budget which trimmed costs by two-thirds. Nevertheless, Cobb estimates sales would have had to be up by an additional 50% so as to have avoided staff reductions.

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