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WASHINGTON, Dec. 30, 1999 --
Much-hyped Value America Inc. says it will lay off half its
employees and seek a buyer after a disappointing holiday sales
season.
While leading cybermerchants reported holiday sales increases
of 400% or more over the previous year, Value America said it
sales fell 9% short of earlier projections.
Value America, which has never shown a profit, had billed itself
as the next Costco or Wal-Mart but, despite a huge advertising
budget, never managed to build a loyal customer base.
The Charlottesville, Va.-based company said it would eliminate
half its 600 employees and discontinue all of its product lines
except computers and office supplies.
When it went public in April 99, Value America's stock soared
to $74.25 on the NASDAQ. It closed at $6.03 yesterday.
Executives blamed the company's poor performance on a new computer
system which, they said, delayed orders and hampered customer
service.
Top executives of the firm, including its co-founders, also
resigned this week.
One analyst said Value America typified the "everybody's
doing it" mentality but noted that more than half of American
consumers say they will never buy online from merchants who
do not have a brick-and-mortar presence in their community.
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