As the net pandemic boom fades, Shopify cuts 1,000 jobs

NEW YORK (AP) — Shopify is cutting 10% of its staff, or about 1,000 employees, because the e-commerce company reckons with an unexpected sales downturn after a pandemic-fueled explosion.

There was a wave of layoffs or cutbacks within the tech sector with Wall Street distancing itself from a few of the fast-growth corporations that flourished over the past two years.

Shares of Shopify Inc., based in Ottawa, Ontario, tumbled 15%.

In a memo sent to employees Tuesday, Tobias “Tobi” Lütke, the corporate’s founder and CEO, said job cuts will probably be made across recruiting, support and sales departments. The corporate said it is also eliminating over-specialized and duplicate roles, as well some groups that were “convenient to have but too far faraway from constructing products.”

The corporate had anticipated that the pandemic would speed up the entrenchment of e-commerce sales by five and even 10 years, Lutke wrote, and the corporate expanded to match those expectations. But he said it’s now clear that bet didn’t repay. Spending, he said, appears closer to patterns seen before the arrival of COVID-19.

“As a consequence, we now have to say goodbye to a few of you today and I’m deeply sorry for that,” Lütke wrote.

Shopify was founded in 2006 as web designer for retailers, but has expanded into a set of services including payments, marketing, and shipping.

Sales leapt 86% between 2019 and 2020, and one other 57% jump, to $4.61 billion, last yr.

By May, nevertheless, Shopify warned of slower revenue growth because the pandemic boom faded.

Employees who’re let go will get 16 weeks of severance pay, plus a further week for each yr of tenure, the corporate said.

The layoffs were first reported by The Wall Street Journal.

Shopify reports second quarter earnings results Wednesday.

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