Freddie’s Flowers plans to restructure with further job cuts as the subscription service sees revenue slump due to the cost of living crisis
- Restructuring of parts of the company “in one direction” Freddie’s wants to overcome the decline
- The wave of layoffs in July was not “sufficient to protect the company”
- Turnover and customer numbers are expected to continue to deteriorate
Freddie’s Flowers is considering restructuring options and has ordered further job cuts as the subscription service’s sales continue to suffer, This is Money has learned.
The company’s workforce was informed by email last week that “customer numbers and sales have fallen further than expected” and are expected to worsen as the cost-of-living crisis deepens.
Freddie’s is meeting with employee representatives at its headquarters today to discuss the terms of the layoff of affected employees. It is unclear how many jobs are at risk.
Bloom boom: Freddie’s Flowers saw its popularity surge during the pandemic – but now appears to be fading
In July, This is Money revealed that Freddie’s had embarked on sweeping job cuts at much of its UK operations, with many affected employees being given just a week’s notice and laid off by law.
Employees were given the option to resign voluntarily or risk being fired, with a payout of just one week for each year of service.
It is not clear how many employees were laid off at the time, but only one employee resigned voluntarily.
In an email from This is Money, Lucy Clamp, Head of People and Culture at Freddie, told employees: “We’ve been through a difficult time as a company.
“We were hoping that… [the July redundancies]…would have been enough to protect the business, but unfortunately since then we’ve seen a bigger than expected drop in subscribers and sales.
“The cost of living crisis is having an impact on our consumers and we do not now expect the economic climate to improve in any way for the foreseeable future.
‘We expect sales to decline next year and we need to respond to these new circumstances.’
She added that the company is considering “one way” to achieve this “by restructuring parts of the organization.”
Clamp said, ‘This means that unfortunately there are positions within the company that are at risk of layoffs.’
Affected employees received a version of the email that read, “Unfortunately, your position is one of the positions at risk of dismissal.”
The company will today consult with a group of “elected workers’ representatives”, who were elected last Friday, and receive further details on the severance packages.
The flower subscription service has been growing rapidly of late, with a wave of recruitment and new business in Europe and the US.
A pandemic-driven boom saw Freddie’s sales soar 81 per cent in the financial year to August last year, with sales soaring from £26.4m to £47.8m over the period
Freddie Garland founded the London-based company in 2014 at the age of 26
However, its rapid growth plans saw losses soar from £333,537 to £4.5m in 2021, while the average headcount rose from 96 to 225
As an unlisted company, Freddie’s is not expected to provide another update to Companies House until September.
But last week’s job losses suggest 2022 has seen much less buoyant trading for the company, which has also been forced to hike prices in recent months.
Other companies with subscription models, such as Services like streaming services have reported a drop in trade in recent months as sky-high inflation forces consumers to cut back on less-essential items.
The company’s business model is based on a weekly subscription to fresh bouquets that buyers put together themselves. The target group are wealthy Brits aged 30 and over.
The latest report shows that Freddie’s Flowers recent cash reserves have risen from £1.6million to £28.4million.
Freddie Garland founded the London-based company in 2014 at the age of 26 after quitting his job at organic food company Abel & Cole.
Freddie’s Flowers has been contacted for comment.