New Leaf Tea fired nearly 1/3 of its employees today as the company attempts to reduce expenses even as it experiences significant sales growth.
The firings are part of a re-staged sales effort to divert cash and other resources into five key markets, according to COO Bill Sipper. While New Leaf will not be pulling out of any states, the workforce reduction will allow the company to focus on slotting fees and promotions within areas in which it has the strongest potential to deepen its consumer base, according to Sipper.
“Our volume is increasing at nice levels and we’re definitely outpacing the category and our competition,” Sipper said. “But our overhead was increasing at higher levels than we would have liked.”
Recent figures from Symphony/IRI indicate rapid growth for New Leaf in major channels – it was up nearly 90 percent over the previous 52 weeks, to $2.1 million – a number that does not take into account many of the up-and-down-the-street sales taking place in cities like New York, where New Leaf has a strong DSD system in place.
But despite the growth, the balance sheet is a big concern for New Leaf, which is publicly traded. If expenses can be cut and sales boosted, that can help the company’s share price.
“At some point you have to look at it from a shareholder value perspective and you have to make some difficult decisions,” Sipper said. “You certainly have more latitude in a private company, but we have a fiduciary responsibility to the shareholders here.”
Sipper took on the job of COO in February; he said that nearly all of the employees who were fired were part of a sales force that has expanded in the past year and that the company would likely look to hire in its key regions on the east and west coasts.
“This is just an attempt to gain more focus,” Sipper said. “We’re here for the long haul and we’ve got a lot of great things going on.”