A letter from the company's CEO David Tolley said it was embarking on a period of engagement with its landlords on "nearly all" of its leases. WeWork's current lease liabilities were more than two-thirds of operating expenses in the latest quarter and "remain too high," he said. He added that the company expects to "exit unfit locations" and focus on its strongest assets.1
The move follows the release of WeWork's second-quarter earnings, in which management said there was "substantial doubt" that it could stay in business without the turnaround plan. Revenue for the second quarter was $844 million, up 4% year-on-year, with a net loss of $397 million marking a $238 million improvement over the same period a year earlier. At that time, the company had cited a highly competitive commercial real estate industry, challenges in managing flexible spaces, and macroeconomic volatility as headwinds to its business.
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