Less than a week after founder and former CEO Brian Lee retook the reigns of subscription ecommerce giant ShoeDazzle, it appears that the executive is wasting no time in making his presence felt. We’ve heard from multiple sources today about massive layoffs at the company, with some putting the figure as high as 40 percent of all employees.

Although dramatic, the move wouldn’t be surprising, given the radical transformation the company has undergone this year. In the months following the Fall 2011 hire of now-ousted CEO Bill Strauss, the entire executive team turned over with Lee’s guys being pushed out and and Strauss’ team brought in.

Strauss then led the widely-questioned abandonment of the subscription model that had been responsible for the company’s fantastic growth up until that point. Although it could have gone either way for Strauss, that move proved to be the beginning of the end of his brief tenure, and possibly of the company’s dominance.

Sources also say that ShoeDazzle has been attempting to raise another round of financing for months now, with little success. Cutting headcount then makes sense in the face of declining revenue and a dwindling cash position.

As we reported earlier today, superstar VP of Customer Acquisitions Chris Nella was hired away by Wittlebee in a process that began nearly two months ago. Nella reported directly to CMO Jonathan Sills who lives in San Diego and commutes inconsistently to the company’s Los Angeles headquarters. According to one source within the company, “His lack of physical presence has severely impacted the marketing team.”

In another interesting twist, we’ve been hearing that co-founder and former President MJ Eng has been spotted around the ShoeDazzle offices recently, following unconfirmed rumors that has parted ways with Brian Lee-backed Teeology. What this means is unclear, but it’s another sign of a company in flux.

With so many rumors circulating and the overall level of uncertainty, it’s clear that the once stable and impressive ShoeDazzle has badly lost its footing. Any company that’s shedding talent both in the executive suite and throughout the ranks gives reason for concern.

Those close to Lee call him a world class executive and expect his midas touch to return the company to its former glory. Others, often those with less stake in the game, have been quick to say that too much damage has been done and call recovery unlikely.

ShoeDazzle has raised $66 million over four rounds from Polaris Venture Partners, Crosscut Ventures, Lightspeed Venture Partners, and Andreessen Horowitz.

We reached out to ShoeDazzle via multiple channels but have not yet received any response from the company. If you have any additional information please email tips (at) pandodaily (dot) com and include “Michael Carney – ShoeDazzle” in the subject..