Canadian tech giant Shopify Inc.’s share price fell by more than 14 per cent Tuesday after revealing it will lay off 10 per cent of its workforce because the company misjudged the growth of the e-commerce sector.
The Ottawa e-commerce company’s stock closed at $40.69 after chief executive Tobi Lütke said in a blog post that most of the staff impacted by the cut work in recruiting, support and sales.
Shopify will also eliminate “overspecialized and duplicate” roles as well as groups that Lütke said were “convenient to have but too far removed from building products.”
Shopify did not share a total number of workers affected by the cuts, but its most recent management information circular shows it ended 2021 with 10,000 employees and contractors, including 3,000 added last year alone. Ten per cent of that total would encompass 1,000 workers.
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, Lütke said.
Shopify bet the amount of shopping people did online instead of at brick-and-mortar retailers would leap ahead by five or 10 years from pre-pandemic predictions.
“We couldn’t know for sure at the time, but we knew that if there was a chance that this was true, we would have to expand the company to match,” Lütke said.
“It’s now clear that bet didn’t pay off.”
Shopify has recently seen people are reverting to pre-pandemic shopping habits. While e-commerce is still growing steady, Lütke said it doesn’t amount to a five-year leap ahead, forcing Shopify to make cuts.
“Ultimately, placing this bet was my call to make and I got this wrong. Now, we have to adjust,” said Lütke.
“As a consequence, we have to say goodbye to some of you today and I’m deeply sorry for that.”
Incorrect assumptions are largely to blame for Shopify’s follies, said Neil Saunders, managing director of GlobalData, in a note to investors.
“Put bluntly, this was a huge strategic mistake that was driven by an insufficient understanding of customer behaviour, a lack of rigour in analyzing the market, and a bit of hubris,” he said.
Yet Shopify is not alone in laying off workers. Over the last few months, Wealthsimple, Klarna, Twitter and Netflix have all shed staff as investor exuberance around tech stocks has faded, inflation has soared to an almost 40-year high and recession rumours have loomed.
Data aggregator Layoffs.fyi has counted 401 global startups that have laid off a collective 57,552 employees so far this year.
Amid a broad market sell-off that has particularly weighed on the tech sector, the price of Shopify’s stock has sunk more than 78 per cent since its late 2021 peak of $222.87. The company completed a 10-for-one share split earlier this year.
The cuts coupled with Shopify’s recent performance increases the likelihood the company will lower its outlook, when it releases its latest earnings Wednesday.
RBC Capital Markets analyst Paul Treiber told investors that he expected Shopify to revise its full-year expectations. The company previously suggested the number of merchants using Shopify’s software would be comparable to that of 2021 and that merchant solutions revenue growth would be more than twice the rate of subscription solutions revenue growth on a year-over-year basis.
Those affected by Tuesday’s layoffs will get 16 weeks of severance pay, plus an additional week for every year of tenure at Shopify. The company will also remove any equity cliff — a minimum amount of period workers have to stay at a company before they can start receiving equity.
Laid off workers will get access to career coaching, interviewing support, resume crafting services and Shopify will cover some of their internet costs during the severance period.
Workers will also be able to keep their home office furniture the company gave them a stipend for earlier in the pandemic and will give a “kick-start allowance” that can be used to buy new laptops.
But Shopify needs to do more than cut workers, Saunders argued.
He wrote, “With Amazon ramping up its services to merchants and opening its solutions to businesses that are not part of its platform, Shopify needs to work harder to appeal to new businesses and retain those existing clients using its services.”
This report by The Canadian Press was first published July 26, 2022.
CALGARY – TC Energy Corp. has lowered the estimated cost of its Southeast Gateway pipeline project in Mexico.
It says it now expects the project to cost between US$3.9 billion and US$4.1 billion compared with its original estimate of US$4.5 billion.
The change came as the company reported a third-quarter profit attributable to common shareholders of C$1.46 billion or $1.40 per share compared with a loss of C$197 million or 19 cents per share in the same quarter last year.
Revenue for the quarter ended Sept. 30 totalled C$4.08 billion, up from C$3.94 billion in the third quarter of 2023.
TC Energy says its comparable earnings for its latest quarter amounted to C$1.03 per share compared with C$1.00 per share a year earlier.
The average analyst estimate had been for a profit of 95 cents per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Nov. 7, 2024.
BCE Inc. reported a loss in its latest quarter as it recorded $2.11 billion in asset impairment charges, mainly related to Bell Media’s TV and radio properties.
The company says its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30 compared with a profit of $640 million or 70 cents per share a year earlier.
On an adjusted basis, BCE says it earned 75 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share in the same quarter last year.
“Bell’s results for the third quarter demonstrate that we are disciplined in our pursuit of profitable growth in an intensely competitive environment,” BCE chief executive Mirko Bibic said in a statement.
“Our focus this quarter, and throughout 2024, has been to attract higher-margin subscribers and reduce costs to help offset short-term revenue impacts from sustained competitive pricing pressures, slow economic growth and a media advertising market that is in transition.”
Operating revenue for the quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023.
BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.
The company says the change comes as it faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.
BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company’s second-best performance on the metric since 2010.
It says the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competitive activity and promotional offer intensity. BCE’s monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.
The company also saw 11.6 per cent fewer gross subscriber activations “due to more targeted promotional offers and mobile device discounting compared to last year.”
Bell’s wireless mobile phone average revenue per user was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.
This report by The Canadian Press was first published Nov. 7, 2024.
TORONTO – Canada Goose Holdings Inc. trimmed its financial guidance as it reported its second-quarter revenue fell compared with a year ago.
The luxury clothing company says revenue for the quarter ended Sept. 29 totalled $267.8 million, down from $281.1 million in the same quarter last year.
Net income attributable to shareholders amounted to $5.4 million or six cents per diluted share, up from $3.9 million or four cents per diluted share a year earlier.
On an adjusted basis, Canada Goose says it earned five cents per diluted share in its latest quarter compared with an adjusted profit of 16 cents per diluted share a year earlier.
In its outlook, Canada Goose says it now expects total revenue for its full financial year to show a low-single-digit percentage decrease to low-single-digit percentage increase compared with earlier guidance for a low-single-digit increase.
It also says it now expects its adjusted net income per diluted share to show a mid-single-digit percentage increase compared with earlier guidance for a percentage increase in the mid-teens.
This report by The Canadian Press was first published Nov. 7, 2024.
