Urban Ladder cuts jobs, aims to be operationally profitable in June quarter

Online furniture store Urban Ladder is said to have laid off close to 90 employees over the past few days, as it aims to trim losses to climb up the profitability rung.

The Bengaluru-based company, which had earlier announced to go for an initial public offering (IPO) in 2020-21 (FY21), aims to become operationally profitable in the April-June quarter and maintain that on a full-year basis in 2019-20 (FY20). 

Ashish Goel, co-founder and chief executive officer, did confirm to Business Standard that the company has taken some tough decisions, including retrenchment of people. He did not divulge the number of employees that would be affected by this move. 

“We had a plan to reduce losses by 70 per cent in 2018-19 (FY19), but it looks like we are slightly behind target. We are taking some hard decisions in the long-term interests of the company,” said Goel. 

The Sequoia Capital-backed firm employs around 800 people across different centres, though most of them are located at its headquarters in Bengaluru.

Goel said even though the financial data for FY19 is not out yet, the company expects losses to come down to below Rs 50 crore in the fiscal year, while in the first quarter of FY20, it may achieve profitability, albeit marginal. 

In 2017-18, the company’s losses stood at around Rs 118.66 crore, by cutting down on the expenses almost by half at Rs 232.73 crore.

“We want to open additional 20 stores across the top 12-14 cities in the country and we are now starting on the franchisee model as well,” said Goel. 

Presently, Urban Ladder operates 11 stores in Bengaluru and Delhi.

The company said its omnichannel strategy had increased the average order value by 24 per cent along with lowering its customer acquisition costs by 43 per cent. It has also optimised other channels on its path to profitability and omnichannel expansion.  

The plan for an IPO in FY21, said Goel, is on track. “We wanted to achieve revenue of Rs 800-900 crore, with a profit of Rs 70-80 crore when we go for an IPO.”

The company has raised total funding of Rs 744.7 crore to date from marquee investors such as Sequoia, Steadview Capital, SAIF Partners, and Kalaari. Ratan Tata, the chairman emeritus of Tata Sons, is also an investor in the company. 

The company is seeking to raise more funds. However, Goel expects a lower size of investment, following improved profitability around the corner.