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Tuesday, 31 October, 2000, 08:05 GMT
NI online video retailer cuts staff
Job cuts as Blackstar aims for profitability
Job cuts as Blackstar aims for profitability
A Belfast -based online video and DVD retailer has said it is being forced to lay off 22 of its staff in order to "reach profitability".

The company said that because of "current financial market sentiment" it could not expect to raise more capital from investors, and is cutting costs so that it can reach profitability in early 2001.

The company said its sales were still rising by over 30% each quarter and that after the restructuring it will continue to employ more than 100 people.

The job losses at BlackStar will affect 10 full-time employees in Belfast and four in London.

The company said it will also shed eight staff on short-term contracts.

It said the action was still necessary despite its success in securing 6.2m from United States investors in July 2000 and 3.8m from Republic of Ireland investors in August 1999.

'Market paradox'

BackStar Chief executive, Darryl Collins, said: "We are faced with the paradox that whilst online shopping is proving increasingly popular, and with our busiest season just around the corner, financial market sentiment has all but evaporated.

"BlackStar must maintain a lean operating structure at this time and push for profitability early next year.

"It is unfortunate that we have to slim down our workforce, but we cannot expect to raise any more capital in these market conditions."

But Mr Collins said he was sure that the company would prosper in the long term.

"We have the relative luxury of having enough cash on hand to get to breakeven and profitability in the near future.

"We are firmly of the view that well funded best-of-breed online retailers will be able to capitalise on the current shakeout over the long-term.

"BlackStar's loyal and hard-working staff will now be able to take advantage of the company's early profitability."

Market float delayed

BlackStar has suffered problems common to many of the new online retailers, that although their sales are growing, reaching profitability is a struggle, because of the broad marketing, successful web selling requires.

In July it postponed floating on the stock market because of "market conditions".

But it is viewed as one of Northern Ireland's most successful online businesses.

It has customers in more than 160 countries, more than 600,000 unique visitors per month and more than 200,000 customers, 70% in the UK.

In October 2000 the company won the British Video Association award for Online Retail Success of the Year, beating and DVDStreet

And in January BlackStar won the Industrial Development Board Trade International Online Exporter of the Year award.

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See also:

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