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Online fashion retailer Jabong, which was acquired by Myntra in 2016, is expected to lay off around 200-250 people, which is 40-50 percent of its total workforce, two sources told Moneycontrol.
The development comes just two days after the exit of Flipkart Group Chief Executive Officer Binny Bansal.
Flipkart owns three fashion brands under its umbrella – Flipkart Fashion, Myntra and Jabong.
Executives with designations of deputy general manager and above informed of the decision, said one of the sources mentioned above. The formal formal announcement will be made today.
The decision has been taken following the lack of growth in Jabong's business during the last two quarters. It has been decided that the operations will be consolidated in Bengaluru.
Myntra and Jabong together have been invited to Bengaluru and cut workforce.
The employees who do not get the option to join in Bengaluru will be offered three months' pay for severance and 15 days of pay for every year served, besides gratuity.
Jabong brand after this consolidation exercise.
"They have done it before. It makes it easy to prepare the manager verbally before the actual thing starts.
"Many employees are willing to move to Bangalore," said another source said.
The conflict of interest arises from the fact that Flipkart already has its own vertical fashion – Flipkart Fashion – which is headed by Rishi Vasudev.
On the cost front, it would not make sense for Walmart – which acquired Flipkart this year – to keep pumping cash into three different brands.
However, no one was expecting the lay-offs to come so suddenly.
During last year's Big Billion Days, Flipkart Group claimed 80 percent market share in the online fashion segment with three brands – Flipkart Fashion, Myntra and Jabong – under its umbrella.
However, this year, while still in the market, Myntra and Jabong did not participate in Big Billion Days and held their own sales called Big Fashion Days.
On Thursday, Moneycontrol reported that after Bansal's exit, the Flipkart Group was imminent, because of which many senior leaders including Ananth Narayanan, CEO of Myntra and Jabong, could leave the company.
While Myntra and Flipkart did not immediately respond to emails on the mass retrenchment development, in an email on Thursday at Flipkart spokesperson had said: "We are excited with the progress we are making at Myntra and Jabong and their business growth. are well focused on bringing the best selection for consumers, and executing the existing strategy. "
"As previously announced, Kalyan will continue to serve as CEO of Flipkart, while Ananth will continue providing great leadership as CEO of Myntra / Jabong He will report to Kalyan and the companies will still operate as independent platforms under the Flipkart group.
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