Shopify, Canadian e-commerce company, said it would lay off 20 percent of its workforce in a second round of mass job cuts.
The e-commerce company also agreed to sell the logistics arm it built over the past few years to freight forwarder Flexport in an all-stock deal, marking a reversal of its strategy of aggressively investing in fulfillment networks.
“They can have the best of both worlds – a logistics business that makes them competitive with Amazon without having to manage a business that is not core to Shopify and had been losing money,” said Gil Luria, analyst at D.A. Davidson & Co.
Shopify had built out its order fulfillment network in recent years on expectations a pandemic-fueled demand boom would last, mirroring similar moves by rivals.
The layoffs announced on Thursday are expected to result in a severance charge of between $140 million and $150 million in the second quarter. Shopify had 11,600 employees and contractors, as of Dec. 31.
Shopify reported revenue of $1.51 billion.
Its earnings for the January-March period showed the benefits from a host of new tools that encouraged businesses from Mattel to Coty to integrate Shopify into their own sites, allowing the company to hike its subscription fees for merchants.
“We are seeing that consumers are really voting with their wallets to buy from brands they love,” President Harley Finkelstein said in an interview. “There is sort of intentionality around discretionary spending.”