Shopify cuts jobs for the second time in less than a year

SHOPIFY cut jobs for the second time in less than a year and agreed to sell the majority of its logistics business to Flexport as it faces a challenging climb back from last year’s slump.

“I don’t want to bury the lede: after today Shopify will be smaller by about 20 per cent and Flexport will buy Shopify Logistics; this means some of you will leave Shopify today,” chief executive officer Tobi Lütke said in a memo to staff. “I recognise the crushing impact this decision has on some of you, and did not make this decision lightly.”

Revenue for the period came in at US$1.51 billion, beating the US$1.43 billion average estimate of analysts surveyed by Bloomberg. Gross merchandise volume, the total value of merchant sales across Shopify’s platforms, was US$49.6 billion, above Wall Street projections of US$47.68 billion.

The Ottawa-based company also gave an outlook for the second quarter, saying it expects revenue to grow at a similar rate to the first quarter growth rate on a year-over-year basis. It also expects to achieve free cash flow profitability for each quarter of 2023.

Shopify bet early in the pandemic that a rapid rise in online shopping, fuelled by customers staying home, would become permanent. As that wager soured, Lütke has attempted to turn the company around. It cut about 1,000 jobs last summer, raised prices and focused on building out client offerings and its in-house fulfilment network.

The company has had to contend with macroeconomic risks, including slower consumer spending and inflationary pressures. Retail sales fell 1.4 per cent in March, according to a preliminary Statistics Canada estimate. BLOOMBERG