Value America On Slippery Slope
WASHINGTON, Dec. 30, 1999 -- Much-hyped Value America Inc. says it will lay off half its employees and seek a buyer after a disappointing holiday sales season.
While leading cybermerchants reported holiday sales increases of 400% or more over the previous year, Value America said it sales fell 9% short of earlier projections.
Value America, which has never shown a profit, had billed itself as the next Costco or Wal-Mart but, despite a huge advertising budget, never managed to build a loyal customer base.
The Charlottesville, Va.-based company said it would eliminate half its 600 employees and discontinue all of its product lines except computers and office supplies.
When it went public in April 99, Value America's stock soared to $74.25 on the NASDAQ. It closed at $6.03 yesterday.
Executives blamed the company's poor performance on a new computer system which, they said, delayed orders and hampered customer service.
Top executives of the firm, including its co-founders, also resigned this week.
One analyst said Value America typified the "everybody's doing it" mentality but noted that more than half of American consumers say they will never buy online from merchants who do not have a brick-and-mortar presence in their community.
