Online used-car marketplace Shift cuts workforce 30% following CarLotz merger
Online used vehicle retailer Shift Technologies cut its workforce by 30% in the first quarter as the company sought to reduce costs and eliminate duplicate positions following its merger with CarLotz, CEO Jeff Clementz said during an earnings call.
The layoffs came as the company saw its revenue plummet in the fourth quarter and its operating losses expand.
Shift closed its merger with CarLotz in December and immediately eliminated duplicate costs and roles, Clementz said during Tuesday’s earnings call. In early February, the company decided to exit CarLotz’s presence on the East Coast and shut down the Downer Grove, Illinois location in order to focus on core West Coast markets. One remaining CarLotz location in Pomona, California remains open. Shift also has three locations in Los Angeles, San Francisco Bay Area and Portland.
“While difficult, we reduced headcount by approximately 30% in the first quarter,” Clementz said on the call. “In addition to corporate roles, the majority of reductions were due to our move to decentralized sales organization, which occurred in February.” He added that the “CarLotz integration and strategic moves to rightsize our SG&A are largely behind us.”
Shift Technologies, which went public in 2020 via a merger with a special purpose acquisition company, reported it generated $65.6 million in revenue in the fourth quarter, a 67% drop from the same year-ago period. Shift reported an operating loss of $60.7 million in the fourth quarter, a 14% increase from the same period in 2021.
Shift did report net income of $13 million in the fourth quarter compared to a net loss of $75.8 million in the same quarter in 2021. However, much of that was due to the one-time gain of $76.7 million from its acquisition of CarLotz. Shift had a net loss of $172 million in 2022, up from the $162.2 million loss it reported the year prior. Notably, the company’s gross profit per unit fell 42% between 2021 and 2022 to $1,208 per vehicle.
The earnings report caused Shift shares to fall. Share fell nearly 28% on Wednesday to $1.21. However, the share price is still hovering above $1, which has allowed the company to regain the Nasdaq exchange listing requirement.
