Juul slashes 400 jobs as embattled vaping company faces growing setbacks
The San Francisco company once reigned supreme in the vaping market
Amid a growing number of lawsuits, and increased competition, embattled vaping company Juul Labs is reportedly laying off hundreds of employees.
A person familiar with the plan told The Associated Press the layoffs include 400 staffers and are part of a cost-saving plan to immediately cut Juul's operating budget by 30% to 40%.
Juul products are displayed at a smoke shop in New York, on Dec. 20, 2018. (AP Photo/Seth Wenig / AP Newsroom)
A Juul spokesperson told FOX Business the company has received an investment of capital that will help it maintain business operations and challenge plans by the Food and Drug Administration (FDA) to ban its products.
"To further secure the company's ability to continue moving forward, we are also undertaking a reorganization, including the difficult but necessary step of separating from many valued colleagues," the spokesperson said. "Look ahead, Juul Labs remains committed to advancing its mission of harm reduction for adult smokers while combating underage use."
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The new cash infusion came from two early Juul investors: Nicholas Pritzker, head of Hyatt Hotels, and Riaz Valani, a private equity specialist based in San Francisco, according to The Associated Press.
The San Francisco company rocketed to the top of the U.S. vaping market five years ago on the popularity of flavors like mango, mint and creme brulee. But rampant teen use fueled a backlash and triggered a series of government actions that have forced the company to drop all U.S. advertising and discontinue most of its flavors.
The company suffered another major blow in June when the FDA rejected the company's application to keep its product on the market as a smoking alternative for adults. The FDA has placed a temporary hold on its initial decision while Juul files an appeal.
FILE PHOTO: A shopkeeper demonstrates smoking a Juul brand vaping pen to customers at a Juul shop in Jakarta, Indonesia, December 30, 2019. (REUTERS/Ajeng Dinar Ulfiana/File Photo / Reuters Photos)
Another setback came in September when the company's largest investor, Marlboro-maker Altria, said it would resume competing on its own in the e-cigarette space forcing Juul to battle for space on retail shelves.
Juul's share of the $5.5 billion retail market, meanwhile, has plummeted to about 33% from a high of 75% several years ago.
Despite its decline in popularity among U.S. teens, Juul remains a target for politicians in Washington and throughout the country seeking to crack down on youth vaping.
In September, Juul announced it would pay $440 million to settle an investigation by nearly three dozen states into its marketing practices and their contribution to the spike in underage vaping. Juul still faces nine separate lawsuits from other states. And thousands of personal lawsuits filed by individual and families have been consolidated in a California federal district court.
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The Wall Street Journal first reported the news of Juul’s downsizing Thursday morning.
The Associated Press contributed to this report.