Another Enjoy Technology CFO out as it faces cash crisis
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- Enjoy Technology’s interim chief financial officer, Cal Hoagland, resigned from the company as of June 1, according to a securities presentation. The departure follows that of former chief financial officer Fareed Khan, who left in April.
- The company did not announce a new interim chief financial officer or a transition plan. Enjoy has been struggling with the rise in cash burning, and its recent introductions include “running company” warnings that it might not survive without additional capital.
- Enjoy, whose CEO and co-founder of JC Penney and Apple’s retail executive, Ron Johnson, operates a “home business” retail channel that aims to bring experiences and knowledge of home shop.
Launched in 2015, Enjoy has built its business in an attempt to cover up what it sees as a lack of service and a personal touch in the e-commerce experience by providing a mobile “store” in the homes of consumers.
The company has contracts with technology brands such as AT&T and Apple, and aims to expand into other retail categories. It features its technology and a retail team that says it “offers everything a store has to offer in the comfort of a home, including setting up, activating, and demonstrating the products we deliver.”
In a video of the company, Johnson points to Uber and Airbnb as inspiration, which turned consumer cars into taxis and homes into hotels, respectively. “Maybe we can take the whole retail store home,” Johnson said in the video. “So we invented the next trade disruption.”
Enjoy was made public in 2021 after merging with Marquee Raine Acquisition Corp., a special purpose acquisition company (or SPAC). Their financial problems have only gotten worse since then.
Enjoy has approximately 650 mobile stores in North America that together generated revenue of $ 355,000 per day. During the first quarter of this year, these stores accumulated a loss of $ 9 million, almost three times the loss of this segment last year.
At the end of last year, Enjoy had a cumulative deficit of $ 642.5 million, and costs were only expected to increase. In the first quarter, the company had cash outflows of $ 47.8 million and net losses of $ 55.2 million, with revenue and other operating costs accumulating well beyond operating levels. ‘income.
Enjoy is currently reviewing its strategic initiatives, which could include a sale or other strategic transaction. To keep it afloat during the process, Johnson lent $ 10 million to the company, a note due later this year, and has also received a $ 6.1 million prepay. by a business client for “future services that are reasonably expected to be provided,” according to a March 31 presentation.
If it cannot secure additional liquidity sources, it may have to file for bankruptcy, the company said. The company also noted in the filing that it will not have enough cash to fund June operations without additional liquidity.
Dana Telsey-led Telsey Advisory Group analysts highlighted the lack of an announced CFO search in the Hoagland departure announcement. “This news, combined with no updates on additional capital insurance, is not a good omen for the future,” analysts said in an emailed note.
Analysts also said they are “increasingly concerned about Enjoy’s ability to continue to operate as a business, given the significant business challenges (product availability and high operating costs) that are leading to operating losses and cash burns higher than expected “.