WeWork Puts Staff in Europe on Notice for Job Cuts
The firm has embarked on a review of its expansion plans in London following a bailout by Softbank.
(Bloomberg) --
WeWork paused its global expansion spree as it weighs pulling back in two of the world’s priciest property markets.
The cash-strapped company has warned European staff -- most of whom are based in London -- that job cuts are looming, just as it ponders exiting some prime Hong Kong real-estate leases. The setbacks come as billionaire backer Masayoshi Son staunchly defended his Softbank Group Corp.‘s stake in the co-working firm, which he said made up the bulk of its $6.5 billion operating loss for the quarter.
WeWork is being forced to put the brakes on one of the fastest and most-hyped expansions in real-estate history. After backers including SoftBank showered the firm with billions of dollars in cash, the company is now scrambling to slash costs following a failed public listing. With the New York-based company yet to turn a profit, it needs to convince investors that its business model is viable.
Consultations with We Co. employees in its European, Middle East and Africa operations will begin this week, according to a person familiar with the matter on Wednesday. The number and timing of potential cuts haven’t been decided, said the person, who asked not to be identified because the details are private.
“WeWork is in conversation with employees in EMEA as we make changes to our operating model and workforce in light of our refocused strategy,” a spokeswoman from WeWork said, without directly addressing potential job cuts. “Leadership has been diligent in its decision making, and we are committed to treating our colleagues fairly and with respect.”
The firm has embarked on a sweeping review of its expansion plans in London, and is reassessing whether to proceed with about 28 potential office deals in its second-largest market.
The deals under review are at varying stages, from a preliminary inspection of promising properties to detailed talks, people with knowledge of the process said last week. The review raises questions about what proportion of these offices the company will end up leasing, the people said.
WeWork is also considering surrendering part of a recently signed lease near Hong Kong’s central business district, people familiar with the matter said. The firm leased four floors, or around 60,000 square feet, for nine years in the Hopewell Centre in Wan Chai in August, one of the people said.
Softbank’s investment in WeWork partly fueled the Japanese conglomerate’s first quarterly operating loss in 14 years, of about $6.5 billion, it said on Wednesday. It wrote down the value of a string of marquee investments, swallowing a charge of 497.7 billion yen ($4.6 billion) for WeWork.
To contact the reporters on this story: Jack Sidders in London at jsidders@bloomberg.net;Shawna Kwan in Hong Kong at wkwan35@bloomberg.net;Shelly Banjo in Hong Kong at sbanjo@bloomberg.net
To contact the editors responsible for this story: Shelley Robinson at ssmith118@bloomberg.net, Chris Bourke
©2019 Bloomberg L.P.
