Language-Learning Company to Discontinue Low-Margin Operation
ARLINGTON, Va.--(BUSINESS WIRE)--Apr. 4, 2013--
Rosetta Stone (NYSE: RST) announced today that it will close all 56 of
its remaining kiosk locations in the U.S. as it accelerates a transition
to cloud-based learning solutions. As part of the move, the company will
reduce its headcount by approximately 45 full-time and 200 part-time
employees. Over the past 18 months, Rosetta Stone has been intensifying
its focus on online sales and digital downloads, and the discontinuation
of its kiosks—located predominantly in malls and airports—advances its
cloud-based business strategy.
“This is another step in the transformation of Rosetta Stone,” said
President and Chief Executive Officer Steve Swad. “Not long ago, kiosks
played a critical role in building our brand and distributing our
products. But today, learners expect us to come to them via the cloud,
and that’s what we’re doing. By meeting customers where they are, we are
pursuing our vision of a world where anyone—anywhere, anytime—can learn
using Rosetta Stone.”
The kiosk channel closure follows on the heels of Rosetta Stone’s April
2 acquisition of Seattle-based Livemocha, which brings with it one of
the world’s largest online language-learning communities and a powerful,
scalable technology platform. In March, the company opened new offices
in Austin, TX and San Francisco, CA—two of the country’s most prominent
recruiting pools for high-tech employees—to reinvigorate its product
development organization. Taken together, these actions signal that
Rosetta Stone is leaning into the explosive growth of cloud-based
Rosetta Stone’s kiosks had come to represent a shrinking portion of the
company’s overall sales mix, especially as their revenue contribution
was eclipsed in 2012 by growth from the web channel and the rising
popularity of digital downloads. The company has closed over 100 kiosks
since 2011, and by exiting its remaining locations, it sheds a
low-margin channel and positions itself to invest in more profitable
channels going forward.
“This is the right move for Rosetta Stone,” said Swad, “and it sets us
up for long-term growth. Certainly it’s difficult to let go of sales
associates who have represented our brand well over the years. But this
is part of a larger strategy for Rosetta Stone, and it makes us a more
nimble and innovative cloud-based learning company.”
About Rosetta Stone Inc.
Rosetta Stone Inc. provides cutting-edge interactive technology that is
changing the way the world learns languages. The company’s proprietary
learning techniques—acclaimed for their power to unlock the natural
language-learning ability in everyone—are used by schools, businesses,
government organizations and millions of individuals around the world.
Rosetta Stone offers courses in 30 languages, from the most commonly
spoken (like English, Spanish and Mandarin) to the less prominent
(including Swahili, Swedish and Tagalog). The company was founded in
1992 on the core beliefs that learning to speak a language should be a
natural and instinctive process, and that interactive technology can
activate the language immersion method powerfully for learners of any
age. Rosetta Stone is based in Arlington, VA, and has offices in
Harrisonburg, VA, Boulder, CO, Austin, TX, San Francisco, CA, Seattle,
WA, Tokyo, Seoul, London, Sao Paulo and Dubai.
Source: Rosetta Stone Inc.
Rosetta Stone Inc.
Steve Somers, CFA