Shopify surges as retailers rush online

Shopify’s stock hit new highs on Wednesday after the Canadian ecommerce group posted better than expected results for the first quarter and pointed to accelerating growth in April.
Revenues increased 47 per cent over the same period last year to $470m, as more retailers were forced to go online during the coronavirus crisis.
“The shift from offline to online commerce is accelerating,” said Amy Shapero, Shopify’s chief financial officer.

The first quarter’s outperformance of Wall Street’s forecasts, which had anticipated sales of about $440m, will consolidate Shopify’s position as one of the strongest challengers to Amazon’s dominance in online retail.
With a platform that spans thousands of retailers both small and large, Shopify’s figures provide a unique window into how the world is adapting to lockdowns and growing unemployment.
Tobi Lütke, Shopify’s chief executive, struck a confident note, suggesting that dire forecasts of consumer spending were based on “bad data” that focused too much on physical retail and not enough on ecommerce.
Among Shopify’s merchants that use multiple sales channels, including online and offline, “we are not really seeing that big of a drop against consumer confidence”, he said. “People are still spending.”
Retailers who were forced to close their physical stores were able to make up 94 per cent of the sales volumes online that they had lost from in-store transactions from mid-March to late-April, Shopify said.
Despite net losses widening to $31.4m in the latest quarter, with losses per share of 27 cents, shares in Shopify rose as much as 6 per cent in morning trading in New York, hitting a new intraday high above $730.

Shopify has prospered by providing behind-the-scenes support to thousands of small businesses, and global brands including Heinz and Heineken, all of whom use its software to run their own independent online stores.
New stores created through Shopify increased by 62 per cent between March 13 and April 24 compared with the previous six weeks, while growth in spending across all the shops that use its platform accelerated in April.
Sales of food and tobacco surged, and clothing, which saw a “softening” in mid-March, recovered later that month and into April. Other areas that experienced new growth in online sales included fitness equipment, baby products, hobby materials and toilet paper.
However, Shopify warned: “It is unclear how sustainable consumer spending levels will be in this uncertain economic environment.”
Ahead of Wednesday’s earnings report, the company’s shares had already risen more than 70 per cent this year, valuing it at more than $80bn.
The company cited research from eMarketer that estimated Shopify last year overtook eBay’s share of US ecommerce sales, leaving it second only to Amazon — whose market share of 37 per cent remains far ahead of the competition.
Shopify did not provide any outlook for the rest of the year, after withdrawing its guidance in April. It said it was monitoring the impact of rising unemployment on new shop creation and consumer spending, as well as how quickly physical retailers were able to move online.
Shopify said it would shift its own spending from marketing to product development in these areas.
During the virus emergency, Shopify has introduced the ability for merchants to sell gift cards, providing revenue even when stores remained closed, and expanded its Shopify Capital loans scheme to the UK and Canada.
Some retailers experienced delays in receiving supply because of “complications” in shipping goods cross-border, Ms Shapero said. But overall, “tailwinds are far outweighing the headwinds for Shopify”, she added, with new “norms and trends” ultimately benefiting the company longer term.
Mr Lütke admitted that small businesses, which make up the majority of his customers, often “struggle the most during a crisis”.
But he added: “I really believe that when it comes to the retail industry, maybe it’s not 10 years but we’ve just jumped a lot of years into the future.”

Trump now says coronavirus task force will continue ‘indefinitely’

Donald Trump said the White House coronavirus task force would “continue on indefinitely”, reversing course from a day earlier when his vice-president said the group could be wound down by the end of the month.
Mike Pence, the US vice-president who chairs the task force, told reporters on Tuesday that the body could be disbanded as soon as Memorial day, on May 25, saying the decision was a “reflection of the tremendous progress we have made as a country”.
Speaking hours later at a Honeywell plant that manufactures respiratory masks in Arizona, Mr Trump defended the plans, saying the US “could not be closed for the next five years”.

But on Wednesday morning, the president switched course, saying on Twitter that the task force, which counts Deborah Birx and Anthony Fauci among its most high-profile members, would continue “indefinitely” with a “focus on safety and opening up our country again”.
“The White House coronavirus task force, headed by vice-president Mike Pence, has done a fantastic job of bringing together vast highly complex resources that have set a high standard for others to follow in the future,” Mr Trump said. “The task force will continue on indefinitely with its focus on safety and opening up our country again.”
“We may add or subtract people to it, as appropriate,” he added.
The White House set up the coronavirus task force in January. Since then, Dr Birx, an immunologist and army colonel, and Dr Fauci, the longtime director of the non-partisan National Institute of Allergy and Infectious Diseases, have become among the most-trusted members of the Trump administration, according to public opinion polling.
Last month, Mr Trump retweeted a post by a Republican former congressional candidate who called for Dr Fauci to be fired, raising concerns that the plain-speaking doctor who makes regular media appearances could be let go.
Mr Trump said on Tuesday that both Drs Birx and Fauci would continue to be involved in the federal government’s Covid-19 response.
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Separately on Tuesday, Rick Bright, the former head of the US biomedical research agency, filed a whistleblower complaint alleging he was removed from his job after pushing for robust scientific evidence and a more aggressive response to the Covid-19 crisis.

Mr Bright, who led the Biomedical Advanced Research and Development Authority until earlier this year, alleged he was removed in part because of his reluctance to push chloroquine and hydroxychloroquine, antimalarial drugs championed by Mr Trump as coronavirus treatments.
He is expected to testify before a congressional panel next week.
The president’s plans to disband the task force had attracted the ire of Democrats and public health experts on Tuesday, with Bob Casey, the Democratic senator from Pennsylvania, saying the president was taking “exactly the wrong approach”.The US death toll surpassed 65,000 on Tuesday after the country reported 2,527 fatalities, its third-highest daily tally. There have been nearly 1.2m confirmed cases of Covid-19 in the US since the start of the year.

Premature US reopening plays Russian roulette with its workers

One apparent silver lining to coronavirus is that it is a “great equaliser”, as New York’s governor, Andrew Cuomo, put it.
Covid-19 can strike Wall Street executives and janitors alike. But try telling that to Amazon’s workforce. Several of its employees have been fired for voicing fears about exposure to the virus. Amazon’s workers are being treated like “fungible units of pick-and-pack potential,” said Tim Bray, a senior Amazon engineer who this week resigned in protest. Meanwhile, Jeff Bezos, the company’s chief executive, earned an estimated $149,353 a minute before the pandemic struck, three times the annual US median income. Amazon’s revenues have soared since then.
We heard a lot about how jet-setters were as exposed to infection as the rest in Covid-19’s early weeks. Whether it was Hollywood star Tom Hanks or Britain’s Prince Charles, the initial impression was of the pathogen’s blind egalitarianism. The lockdown changed all that.

Social distancing favours the better off. They tend to live in less densely populated areas, with fewer people per household. They are also much likelier to be able to continue to work remotely. Both their earnings and wellbeing are far better shielded from the microbe.
In a breakdown of the disease’s effects on New York, a study by the Centre for Economic Policy Research shows that the poorer your zipcode, the likelier you are to have died. The same applies to jobs. Those working in transport, healthcare, delivery, grocery stores or construction are likelier to have died than people working from home.
The same is true anywhere. Infection rates in Singapore and Dubai are resurging as the microbe hits migrant workers housed in dormitories in semi-segregated parts of town. New York’s boroughs divide people along similar lines.
New Yorkers lift everyone’s spirits by banging pots and pans each night in appreciation of essential workers. Public solidarity is a valuable thing. But it does not deliver protective gear to those who are daily exposed to the virus. Many tip the people who deliver Amazon’s products and other packages to their doors. Again, the sentiment is laudable. But it only makes up for a little of the hazard pay such workers are not receiving. For many years, particularly since 9/11, Americans have been thanking armed forces personnel for their service. While benefits have improved, such displays have had little impact on their pay rates.
Coronavirus hit a US economy with pre-existing conditions. More than 33m Americans, almost a quarter of the civilian workforce, lack paid sick leave. Over half of those employed in hospitality, leisure and travel have no health insurance. In late March, the US Congress passed a $2tn rescue bill that covered most Americans affected by the lockdown (in theory; some have still not received their cheques). It was a good package under the circumstances, and compared well to the modest fiscal efforts of many European democracies. But that bill is likely to have marked Washington’s peak. As the US reopens, Americans who cannot work from home face an unenviable dilemma.
A majority of states are now easing their lockdowns. This poses two dangers. The first is that most states have rising or flat rates of Covid-19 infection. They are ignoring the White House’s already diluted guidelines for reopening. One of these is that a state should see 14 consecutive days of falling infections before easing. Returning to work in these conditions is personally risky. It is also collectively dangerous. A leaked draft of a government report forecasts the daily US death rate rising from around 2,000 now to 3,000 by June.

The second is that workers who don’t not show up for work risk losing their current income, whether that was stay-at-home wages or unemployment benefits. Yet at the same time, Mitch McConnell, the Senate majority leader, insists the next relief bill must give employers liability protection against employees or customers who catch the disease. Most states do not legally mandate that businesses give protective gear to staff. Such dilemmas confront only those who have to leave home to keep on earning — often by crowded transport.
America’s premature reopening makes a travesty of the idea that the pathogen is a great leveller. US consumers are lucky to have providers as inventive as Amazon and meat processors as productive as Tyson. Such service comes at a far steeper price than the bills they see. “Thank-you for your service,” is a thin mask for the underlying reality. The US entered the pandemic in a rousing spirit of equality. It is gradually exiting the lockdown more unequal than it began.
edward.luce@ft.com

Uber to cut 3,700 jobs due to coronavirus hit

Uber is to cut 3,700 jobs, roughly 14 per cent of its corporate workforce, blaming the drop in business due to coronavirus.
In a staff memo seen by the Financial Times, chief executive Dara Khosrowshahi warned additional cuts would be announced in due course as the company made “difficult adjustments” to match “the reality of our business”.
“We are looking at many scenarios and at each and every cost, both variable and fixed, across the company,” said Mr Khosrowshahi, who has waived his salary for the remainder of the year. “You can expect we will have a further, final update for you within the next two weeks.”

The ride-sharing company joins a string of major Silicon Valley names making deep cuts. Last week, rival group Lyft said it would cut 17 per cent of its workforce. On Tuesday, home-sharing site Airbnb said it planned to lay off 25 per cent of its staff as it focused on its core home-sharing business.
Uber’s job cuts, which were rumoured last week after the company’s chief technology officer resigned, will at first mostly affect customer support and recruiting teams, the company said in a filing. It added that it expected to incur a $20m cost for severance payments.
The company said it would close about 40 per cent of its 450 “Greenlight Hubs”, facilities where the company’s drivers are given assistance in signing up to the app and other related needs.
It did not provide any additional guidance on the extent to which coronavirus had hit its business, other than to reiterate that rides were down “significantly”. “And with our hiring freeze,” Mr Khosrowshahi said in the memo, “there simply isn’t enough work for recruiters.”
In mid-March, as major cities were entering lockdown, Mr Khosrowshahi told investors and analysts that bookings for cars were down as much as 70 per cent in some early-hit markets such as Seattle. Uber is expected to report its first-quarter earnings after the markets close on Thursday.
Before the pandemic, Uber told investors it expected to record one profitable quarter by the end of this year, before adjusting for interest, taxes, depreciation and amortisation. It has since withdrawn its guidance for the year, but has not yet updated on its profitable quarter target.

Last year, the company removed 800 posts in its marketing, engineering and product teams over the course of two separate redundancy rounds in July and September.
Other recent cost-cutting measures include the shutting of its Uber Eats businesses in seven markets — Czech Republic, Egypt, Honduras, Romania, Saudi Arabia, Uruguay and Ukraine — announced on Monday. As part of the plans, Uber said it would transfer its Eats business in the UAE to its Middle East-focused subsidiary, Careem, where about 30 per cent of jobs will also be cut.