Embattled Juul to Scale Back Global Reach, Relocate Headquarters
Embattled Juul to Scale Back Global Reach, Relocate Headquarters
(Bloomberg) -- Juul Labs Inc. plans to move its headquarters from San Francisco to Washington, D.C., scale back its overseas operations and cut almost a third of staff, said a person familiar with the company’s plans.
The moves represent a dramatic reversal for the once-unstoppable company, which has come under regulatory pressure as it’s increasingly blamed by lawmakers and consumers for igniting a teen vaping epidemic.
The embattled e-cigarette company is planning to exit South Korea and reduce its presence in France, the person said, adding that the company is also exploring its options in Austria, Belgium, Portugal and Spain.
The Wall Street Journal first reported the restructuring news.
Juul also plans to slash about 900 jobs -- or one-third of its workforce, seeking voluntary resignations from employees in the U.S. and Canada before further cuts to meet the target number, according to the person, who asked not to be identified because the information isn’t public. Juul eliminated about 650 jobs late last year, leaving it with around 3,000 employees.
The company is actively looking to reduce its space in San Francisco, though it will maintain a presence in the city, the person said. Juul is trying to sell the office tower it bought at 123 Mission Street last year and has sought to exit offices at a WeWork location.
Chief Executive Officer K.C. Crosthwaite is set to outline the changes Tuesday, according to the person. Employees across the globe were asked to participate in an all-hands meeting in an email viewed by Bloomberg News. The email didn’t provide further details.
Juul’s fortunes have fallen rapidly in the space of less than a year. Until last summer, the company was rapidly expanding and increasing spending. At one point, it was hiring 300 people a month, and bought a pricey office building in San Francisco.
Sales skyrocketed 516% between 2017 and 2018, according to a recent financial disclosure viewed by Bloomberg News. In 2019, revenue topped $2 billion while Juul reported a net loss of $1 billion, according to the document.
But as concern grew over Juul’s popularity with minors, the company became the target of numerous federal investigations, hundreds of product liability lawsuits and a handful of state lawsuits. The company has said it has never targeted minors in its marketing or promotions.
Now Juul, whose major shareholder is cigarette giant Altria Group Inc., finds itself quickly shrinking and racing to rein in spending. It raised $722 million from investors in February, according to a regulatory filing.
In 2019, Juul’s general and administrative expenses nearly tripled from the previous year, to $1.3 billion, according to the financial document. The company recorded $69 million in restructuring and other charges.
While Juul still holds 60% of the e-cigarette market, its sales have fallen about 10% over the past year, according to data from market research firm IRI. And it faces still another hurdle: the FDA has required Juul and its competitors to apply by Sept. 9 for authorization to continue selling its products.
Juul has become an increasing issue for Altria, which has written down the investment twice. The 35% stake was valued at $4.2 billion in January. And in April, federal antitrust regulators sued to unwind Altria’s 35% stake in the company.
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