E-commerce firm Meesho has laid off 251 employees constituting 15% of its workforce to cut costs and as part of its efforts to achieve profitability, a top company official said on Friday, May 5, 2023.
Meesho Founder and CEO Vidit Aatrey in an email to employees informed about the decision and announced that all the affected employees will get one month extra severance pay beyond the notice period as well as employee stock ownership plan(ESOPs) irrespective of the period they have been with the company.
"We are reducing the size of the Meesho workforce by 15%, affecting 251 employees," Mr. Aatrey said in an internal email.
He said that the company grew 10 times from 2020 to 2022 which was aided by COVID tailwinds and aggressive investments.
“Even as we tracked our plans, the macro climate undeniably and considerably changed. As a result, we have had to accelerate our timeline to profitability as part of Project Redbull, while readjusting our GMV growth goals to 30% YoY.”
"While our cash reserves buffer us well for these harsh circumstances, we need to stay highly prudent on the cost front," Mr. Aatrey said.
A recent report by Jefferies had said that Meesho is already contribution-margin positive (pre-marketing and indirect spends) and the company is nearing zero cash burn and is on track to achieve Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) breakeven this year.
When contacted, the company spokesperson said: "We have taken a difficult decision to part ways with 251 Meeshoites constituting 15% of the employee base, as we look to work with a leaner organisational structure to achieve sustained profitability." The spokesperson said that the company is committed to ensure all those impacted have its full support and will be provided a separation package that includes a one-time severance payment of 2.5 to 9 months (depending on tenor and designation), continued insurance benefits, job placement support and accelerated vesting of ESOPs.
"We remain grateful for their contributions in building Meesho," the spokesperson said.