It's hard to read the tea leaves on this one, since this company has survived and evolved through things far worse than this:
CEO Greg Scholl is leaving the company, which is also laying off one-fifth of its team. News reports and press releases indicate that this is simply a "cost-cutting" move. As The Orchard moved into digital distribution and away from the brick-and-mortar fulfillment business, it became more dependent on automated systems instead of physical inventory.
You don't need quite as many people to manage a database as you do a warehouse.