This post was originally published on this site
Wish executives predicted a rough holiday season, but the results were even worse than expected and led to a new chief executive planning to lay off nearly 200 employees while admitting a material weakness in financial operations.
ContextLogic Inc.
WISH,
the parent company of the Wish e-commerce business, reported Tuesday a fourth-quarter loss of $58 million, or 9 cents a share, after a loss of $3.04 a share in the year-ago period, when the company’s initial public offering dinged GAAP results. Revenue declined nearly 65% from the previous holiday season, to a total of $289 million from $794 million last year.
Analysts on average expected Wish to report a loss of 7 cents a share on sales of $310 million, according to FactSet. Shares fell as much as 10% in after-hours trading, following a 4.2% decline to $2.27 in the regular session.
Wish stock has been slammed in the past year after a warm welcome to Wall Street in the fall of 2020, when it raised more than a billion dollars by selling shares at $24 apiece. The company showed stark sales declines throughout 2021, and after a woeful holiday forecast a year after its IPO, founder Piotr Szulczewski said he would step down as chief executive.
On the final day before Szulczewski was to step down earlier this year, Wish named his replacement: former Foot Locker Inc.
FL,
exec Vijay Talwar. In Tuesday’s announcement, Talwar disclosed that the company expects to lay off about 15% of its staff, roughly 190 employees.
“As part of our turnaround strategy, we have made the difficult decision to reduce our global workforce,” Talwar said. “We are also making other cost reductions in order to right-size the business. These initiatives are critical to the long-term success and sustainability of Wish.”
Wish expects to pay out about $3 million in severance and spend about $21 million to exit certain leases and in other cost-cutting moves. Executives hope to cut $32 million to $37 million in annual expenses.
Wish also disclosed that it has identified two material weaknesses in its financial reporting, specifically related to control of its information-technology processes and COSO framework, a risk-management operation. Executives are devising a plan to address those weaknesses, and said they would provide more information about them in the company’s annual filing with the Securities and Exchange Commission.
Wish shares have declined 88.5% in the past year, as the S&P 500 index
SPX,
gained 12.1%.
