Associated Press
FOSTER CITY, Calif. – Online grocer Webvan Group Inc. closed today and said it would file for Chapter 11 bankruptcy.
The decision will lay off 2,000 employees and terminate the Foster City-based company’s service to 750,000 active customers in seven markets – San Francisco, Los Angeles, Orange County, San Diego, Seattle, Chicago and Portland, Ore.
Launched in mid-1999, Webvan had been one of the Internet’s highest profile businesses. Promising to revolutionize the supermarket industry by taking orders online and delivering groceries to customers’ homes, Webvan had raised about $800 million from venture capitalists and Wall Street.
The company never came close to making money, losing $700 million since its inception.
“We are walking off the field exhausted and a bit bloodied, but holding our heads high,” Webvan spokesman Bud Grebey said during a press conference today.
The first word of the shutdown came from employees at one of the company’s Bay Area distribution centers who said they were being laid off.
“There was no severance. They just gave us 80 hours of pay,” warehouse worker Jim Aust told San Francisco Bay area television station KTVU.
Webvan began delivering groceries in June 1999 with plans to expand into 26 metropolitan markets by the end of 2002. Its downhill slide began in June 2000, shortly after Webvan announced an agreement to acquire rival Homegrocer.com of Kirkland, Wash.
On June 29, the company received shareholder approval for a 1-for-25 reverse stock split. Under a reverse split, a company reduces the number of outstanding shares in an attempt to boost its market value.
Webvan’s stock closed Friday at 6 cents per share on the Nasdaq Stock Market.
Copyright ©2001 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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