Shopify to lay off 10% of workforce after pandemic growth bet ‘didn’t pay off’: CEO – National | Globalnews.ca

Shopify, the Canadian e-commerce giant that was once the country’s most valuable company, is laying off roughly 1,000 employees or 10 per cent of its workforce.

CEO Tobi Lütke said in a letter to employees made public Tuesday that the company made a bet that the global retail transition to e-commerce, which picked up during the COVID-19 pandemic, would continue to accelerate.

The Ottawa-based company, which backs digital storefronts and provides a variety of e-commerce services to its “millions” of merchants had scaled up its workforce to meet the demand it projected, Lütke wrote.

“It’s now clear that bet didn’t pay off,” he said, taking the blame.

“Now, we have to adjust. As a consequence, we have to say goodbye to some of you today and I’m deeply sorry for that,” he said.

Most of the lay offs are in recruiting, support and sales jobs, Lütke wrote, as well as eliminating over-specialized and duplicate roles.

Shares of Shopify sank 16 per cent on the Toronto Stock Exchange Tuesday in reaction to the news, trading at $39.53 as of 10 a.m. ET.

Shopify is one of the tech stars that has been hammered during the recent market downturns, falling from an all-time high of $222.87 back in November. (Stock prices have been adjusted following a recent 10-for-one share split.)

The layoffs, which will be effective by the end of the day Tuesday, will come with 16 weeks of severance pay plus one week per year of the employee’s tenure. Restrictions on when an employee can sell their stock in the company will also be waived and medical benefits will be extended, Lütke said.

Shopify transitioned to a fully remote setup in the early days of the pandemic, one of the first companies to take such a step in March 2020, and kept the model permanently.

The company is taking back the “hardware” it provided to employees, Lütke said, but those affected can keep the home office furnishings Shopify had covered during that time. The company will continue to pay internet bills over the transition and provide a “kickstart allowance” to help pay for new laptops.

He also said the company will help affected employees transition to new jobs where possible.

Shopify is set to report its second-quarter earnings on Wednesday morning.

More to come.

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