ModCloth Undergoes Another Round of Layoffs

The company's second since July.
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Eliza Brooke
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The company's second since July.
One of the company's cheery ads. Photo: ModCloth

One of the company's cheery ads. Photo: ModCloth

After dismissing 70 employees in mid-July, ModCloth has been forced to cut its staff once again. A rep for the e-commerce site confirms that a round of layoffs took place on Thursday but declined to say how many employees had been let go or what the company's numbers stood at before or after the dismissals.

While startups often suffer from the problem of scaling up too quickly, over-hiring and then having to pare things back a bit, that's apparently not the case here. 

"While our company is still growing faster than the industry as a whole; we have been impacted by the broader downturn affecting the retail sector," ModCloth's statement reads. "As a start-up, it is in our DNA to remain nimble and these cuts will allow us to return to profitability. We are confident that the difficult decisions made this week position us for a return to stronger growth in the months ahead."

It's true: Retail isn't in the best place at the moment. According to numbers from the Department of Commerce, U.S. sales declined in September for the first time since January, and clothing retailers suffered more than most, with sales sinking 1.2 percent. In the luxury sector, LVMH and Burberry both cited the adverse retail climate as a concern in their quarterly reports this week. With more earnings results rolling in next week, it's likely to be a refrain we'll be hearing a lot.

Along with the layoffs, there's going to be some geographic reshuffling of ModCloth's operations; the e-commerce company currently has offices in San Francisco, Los Angeles and Pittsburgh. 

According to a source at ModCloth, the majority of the layoffs affected its San Francisco headquarters, which houses marketing, finance, analytics, HR, tech and merchandise planning operations. Meanwhile, ModCloth is shifting a few teams and the bulk of its tech operations to Pittsburgh. Since fulfillment also takes place in Pittsburgh, that team will be staffing up for the holiday rush.