Buy-now-pay-later is facing regulation in multiple countries. Photo / NZME
Buy-now-pay-later is facing regulation in multiple countries. Photo / NZME
Kiwi buy-now-pay-later operator Laybuy is laying off more staff - its second round of redundancies in less than a year - as it strives to reach profitability.
The company said it intends to restructure part of its business in a proposal that will impact around 10 per cent of itsworkers.
Last July it announced plans to cut its headcount by around a third - about 45 staff - mainly from its head office on Auckland’s North Shore.
Managing director Gary Rohloff said the company had experienced a larger than anticipated softening in the retail environment in all three of the markets it operates in due to the tougher economic conditions.
“In light of that softness, the company is taking a proactive and prudent approach to this weaker environment by ensuring the business is further right-sized. Taking this action now will place the business in a stronger position for the future.”
Laybuy operates in New Zealand, Australia and the UK.
Gary Rohloff, managing director of Laybuy. Photo / Supplied
Rohloff also warned there was a “possibility” it might need to extend the delivery of its profitability objective beyond March 31.
That’s a change of tune from an investor presentation last month where the company reaffirmed its expectation to be ebitda (earnings before interest, tax, depreciation and amortisation) profitable in March 2023.
Rohloff said the first two months of the year, which were traditionally softer following the Christmas peak, had delivered lower-than-anticipated activity as consumers faced cost of living pressures and rising interest rates.
“While we have significantly improved our credit and fraud losses, the risk of a continued decline in consumer discretionary spending means that we need to continue to review the efficiency of our operations right across the business.”
Figures released by Canstar show there has been a drop in the number of people using buy now pay later compared with two years ago.
It found 12 per cent of Kiwis it surveyed had buy now pay later (BNPL) debt, down from 19 per cent. The report noted the fall was most dramatic for those aged in their 20s, 40s and 50s where usage had declined by over 40 per cent.
The survey also found attitudes towards buy now pay later had changed. Two years ago 60 per cent of under-50s believed it was a responsible way to spend but that had now dropped to under 46 per cent.
The most common use of BNPL was for purchasing clothes and shoes followed by homewares.
The sector is also facing regulation in multiple countries.
In New Zealand the Government has proposed bringing BNPL under the Credit Contracts and Consumer Finance law but with an exemption that would allow up to $600 of credit to be given without providers having to do affordability checks.
Currently, BNPL isn’t covered by the law as it doesn’t charge interest but budgeting advice groups have warned it can be a trap for vulnerable people to get into a cycle of debt as late or missed payments attract fees.
In January Laybuy announced plans to delist from the ASX after seeing its share price slump despite releasing a near-record revenue figure in November.
Laybuy confirmed today independent director Harry Haberlin had resigned effective March 24 - the same day the company will leave the ASX.
It will instead be listed on the Catalist market - a New Zealand licensed exchange which has windows where trading takes place rather than continuous trading.
Laybuy had an initial public offer price of A$1.41 when it listed in September 2020 and its shares soared as shoppers turned to online payments under pandemic lockdown conditions.
But they fell sharply in 2021 amid a broad sell-off of buy now pay later stocks.
Its shares last traded at 3 Australian cents and the company has a market capitalisation of A$7.47 million.
