Canada's Shopify Inc is laying off 10% of its workforce, the e-commerce company said on July 26, as it struggles with sales growth due to a post-pandemic slowdown in online shopping.
The company had placed its bets on a pandemic-driven boom in online shopping. "It's now clear that bet didn't pay off," Chief Executive Officer Tobias Lütke said.
Shopify will also eliminate "over-specialized and duplicate" roles, as well as groups that Lütke says, were "convenient to have but too far removed from building products."
The company is carrying out the cuts because the COVID-19 pandemic created a surge in demand for Shopify's software as consumers shifted to making a higher number of purchases online. About 1,000 workers will be affected, according to the Wall Street Journal, which was the first to report the news.
Following the news, shares of Shopify Inc., based in Ottawa, Ontario, tumbled 15%.
Shopify was founded in 2006 as web designer for retailers, but has expanded into a suite of services including payments, marketing, and shipping.
Sales leapt 86% between 2019 and 2020, and another 57% jump, to $4.61 billion, last year. By May, however, Shopify warned of slower revenue growth as the pandemic boom faded.
Employees who are let go will get 16 weeks of severance pay, plus an additional week for every year of tenure, the company said.
Shopify is slated to report its second quarter earnings results on July 27.
(With inputs from AP)
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