Juul to cut up to 15% of staff, facing limits on e-cig sales

Juul Labs Inc. plans to cut 10% to 15% of its workforce, adjusting to limits on sales of its flavored e-cigarette products, according to a person familiar with the matter.

The largest e-cigarette maker in the United States had been making preparations for the dismissals since at least last month, when it had about 3,900 employees. The move is expected to affect as many as 585 workers.

All departing employees will receive severance, along with their prorated bonuses, according to Juul. A spokesperson declined to comment on the number of jobs set to be eliminated.

The cuts are part a broader restructuring plan that also includes the suspension of all broadcast, print, and digital product advertising in the nation. Juul chief financial officer Tim Danaher and chief marketing officer Craig Brommers are also leaving the company. Juul named Guy Cartwright, who initially joined the company a few months ago from the investment firm TowerBrook Capital Partners LP, as its new CFO.

“As the vapor category undergoes a necessary reset, this reorganization will help Juul Labs focus on reducing underage use, investing in scientific research, and creating new technologies, while earning a license to operate in the U.S. and around the world,” chief executive officer K.C. Crosthwaite wrote in an emailed statement. The Wall Street Journal and CNBC earlier reported details of Juul’s personnel moves.

The vaping industry is facing scrutiny from state and federal officials over concerns of a youth epidemic, which helped prompt a proposed ban on flavored e-cigarettes by the Trump administration. As Juul takes steps to self-regulate, the United States may back down from a plan that would have banned mint and menthol flavors, in addition to the fruit and dessert flavors Juul recently stopped selling.

Crosthwaite joined Juul last month from Altria Group Inc., which sells Marlboro cigarettes in the United States and is the largest investor in Juul. He was Altria’s chief growth officer. Gaining trust with regulators and policymakers worldwide has been one of his priorities, along with exploring new technology like a Bluetooth-connected device that could be used to combat underage use of its products, the company said. Crosthwaite is also combining several technical teams, including hardware engineering and design, into one product team to “develop and refine” these new technologies.

The new CEO brings experience dealing with regulators as the company seeks approval for its e-cigarette products from the Food and Drug Administration. “Crosthwaite has important regulatory experience and industry knowledge, which we believe is needed at Juul,” said Michael Lavery, an analyst at Piper Jaffray & Co. However, flavored vape products make up 80% of Juul’s sales, Lavery said, meaning the company is likely to struggle further next year.