Vaping company Juul cuts 400 jobs amid growing setbacks

Troubled e-cigarette company Juul Labs announced hundreds of layoffs on Thursday as it weathered lawsuits, government bans and growing competition from e-cigarettes.

Juul said it has secured new financing to stay in business and continue operations, including a challenge plan by the Food and Drug Administration to ban its products.

The layoffs, which include 400 employees, are part of an immediate cost-saving plan to slash Juul’s operating budget by 30% to 40%, according to a person familiar with the matter who requested anonymity to discuss its details. The new cash infusion came from two of Juul’s early investors: Nicholas Pritzker, head of Hyatt Hotels, and San Francisco private equity specialist Riaz Valani, according to the same people.

For weeks, industry analysts speculated that Juul could soon declare bankruptcy or sell itself to another company. Thursday’s announcement appeared to at least delay any move in that direction.

“This investment will allow Juul Labs to maintain business operations, continue to advance its administrative appeal of the FDA’s marketing denial order, and support product innovation and scientific generation,” a company spokesperson wrote in an email.

The Wall Street Journal first reported the news on Thursday morning.

Five years ago, Juul topped the U.S. e-cigarette market thanks to the popularity of flavors like mango, mint and creme brulee. But the San Francisco company’s rise has been fueled by teenage use, some of whom are hooked on Juul’s high-nicotine pods.

The backlash against teen vaping has sparked a flurry of government action that forced the company to retreat. Juul has dropped all U.S. advertising and discontinued most flavors since 2019.

The biggest blow came in June, when The FDA rejected the company’s application to keep its products on the market As an alternative to smoking for adults, it puts its future in uncertainty. The FDA said Juul did not adequately address key questions about the potential for chemicals to seep from its devices. The FDA temporarily put the original decision on hold while Juul appealed.

Another setback came in September, when tobacco giant Altria, the company’s largest investor, announced plans to resume independent competition in e-cigarettes.

Altria pulled its own e-cigarettes from the market in 2018 after buying a nearly $13 billion stake in Juul.but that Investment has lost more than 95% of its value As Juul’s prospects dim, Altria could opt out of its non-compete agreement.

The decision means Juul may soon be forced to compete for retail shelf space with Marlboro maker Altria and longtime rivals such as Reynolds American’s Vuse, which recently overtook Juul as the leading e-cigarette brand in the United States.

Juul’s share of the $5.5 billion retail market has plummeted to about 33% from a high of 75% a few years ago.

While Juul is no longer popular with U.S. teens, the company remains a target of politicians in Washington and across the country seeking to crack down on teen vaping.

In September, Juul announced that it would pay $440 million to settle investigation Nearly three dozen states for their marketing practices and their contribution to the surge in underage vaping. Juul still faces nine separate lawsuits from other states. Thousands of individual lawsuits brought by individuals and families have been consolidated in California federal district court.

Matthew Perrone, Associated Press

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