Stretchsense culls 145 staff after $US92m buyout falls over
Smart clothing startup Stretchsense has laid off about 145 of 180 staff after a buyout deal with a Japanese retailer fell over.
The cuts were confirmed to NBR by a manager who is one of those laid off this month (chief executive Ben O’Brien did not immediately respond to a request for comment).
Last November, Smart Today – which bills itself as Japan’s largest online retailer – paid $US20 million for the option to raise a 40.44% stake in StretchSense to 100% for $US92m.
The option did not expire until September 30 this year.
But on April 27 Start Today said it was calling off the deal – triggering Stretchsense to lay off most of its staff this month.
The Auckland-based startup and the Japanese retailer were collaborating on the Zozo Suit, a stretchy suit with smart sensors for measuring your body shape – helping you to buy clothes online that are an exact fit.
But the April 27 market announcement by Start Today says it has now turned to an alternative manufacturer for “purchasing a more easier [sic] and low-cost body measurement solution than the solution using the technology of Stretchsense.”
A separate announcement, dated the same day, said Start Today reported an "extraordinary loss" of 1486 million yen ($20 million), due to a writedown of its investment in StretchSense.
The Kiwi affiliate “has been struggling compared to the original plan,” the statement said.
The Zozo smart suit, which used sensors in its fabric to take exact body measurements for easier online clothes shopping. Smart Today has replaced it with a camera-based system sourced from China.
Founded in 2012 by Auckland University students Todd Gisby and Mr O’Brien plus bioengineering Associate Professor Iain Anderson, Stretchsense to commercially exploit sensors that can be used in “smart clothes".
Smart Today was the company’s first major deal.
Last November, Mr O'Brien pitched it as the perfect marriage of Kiwi geeks to an online retailer with the distribution and marketing muscle to get product sold.
The startup has received four rounds of founding from Crown agency Callaghan Innovation, including a three-year Growth Grant worth up to $15m that runs until 2019.