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Away sees 90% drop in revenue, furloughs half of its employees

The travel startup has chosen to furlough most of its employees rather than lay them off.

Away sees 90% drop in revenue, furloughs half of its employees
[Photo: Away]

The coronavirus has been already brutal for consumer-facing businesses, and Away is the latest startup to take a hit.

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Away’s products are all focused on travel, which has ground to a halt over the last month, and it hasn’t found a way to pivot in the midst of this crisis. According to a Medium post by Steph Korey and Jen Rubio, Away’s cofounders, the company has seen a 90% drop in sales over the last few weeks.

Other direct-to-consumer brands have had a similarly difficult time as consumer spending grinds to a halt. Everlane let 290 employees go; the Wing cut half of its corporate staff and almost all of its hourly workers; Thirdlove and Rent the Runway laid off all of their retail employees.

But in the post, Korey and Rubio say they are laying off only 10% of their team and furloughing about half. The laid-off workers will get eight weeks of pay, healthcare coverage until June, and an extended period to decide what to do with their equity. The company also says it will pay for the cost of career coaching and will circulate the résumés of laid-off employees to help them find new jobs if they so choose.

The furloughed employees are largely from the retail and customer experience teams and will continue receiving benefits. They’ll also be eligible for government assistance. (In March, Away closed its 10 retail stores; before the crisis, it had a significant retail expansion in the works.)

We reached out to Away for more specifics, but the company did not respond by the time of publication.

Korey and Rubio say that these staffing reductions were necessary to keep the company afloat. The cofounders say they’ve stopped taking a salary, and members of Away’s leadership team have also taken a salary reduction. “A month ago, we were making a healthy profit margin on every order,” they write. “Today, the company’s salary costs alone exceed our revenues many times over. What once seemed like a healthy cash balance is no longer enough to keep the lights on without dramatic action.”

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While many retail startups are suffering, not all of them are dealing with the crisis with layoffs. As a way to keep employees on staff, some companies like Ministry of Supply and Rothy’s have started making masks for frontline workers.

It’s hard to know whether DTC companies will be able to keep employees on board as the pandemic drags on. As consumers remain stuck at home and a looming recession makes them more cautious about spending, brands will likely continue to see depressed revenues. And without significant reserves of cash, it will be difficult to keep paying their employees’ salaries and benefits.

It’s highly unlikely that the travel industry will be up and running soon, which suggests Away will continue to struggle in the months to come. For now, the brand is using its Instagram channel to show customers how to use their suitcases creatively while at home, as props for workouts, bedside tables, and laptop stands.

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About the author

Elizabeth Segran, Ph.D., is a staff writer at Fast Company. She lives in Cambridge, Massachusetts

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