Klarna, the Swedish buy now, pay later (BNPL) company, has announced its plans to cut 10% of its workforce as it faces challenges brought on by a troubled global economy. The company’s CEO, Sebastian Siemiatkowski, stated that weakening consumer confidence is the reason behind the job cuts. Klarna currently employs around 6,500 people and has seen a decline in its prospects since last autumn, with consumer confidence being affected by surging inflation worldwide and the ongoing war in Ukraine.
In a blog post addressing the upcoming job cuts, Siemiatkowski acknowledged the changing world and stressed the need for Klarna to adapt to the new reality. He emphasized the importance of making tough decisions and staying focused on the company’s future success. The evaluation process included ensuring the right team focuses on the right things and having the right people in the right positions. Klarna plans to cut approximately 650 positions and affected staff will be informed in the coming days. The specific locations where the job cuts will take place have not been disclosed.
As the leading player in the flourishing BNPL sector, Klarna has millions of users globally and collaborates with numerous retailers to offer interest-free installment payment options. In the UK alone, it has 16 million users. However, recent reports suggest that Klarna is seeking a new round of investment, which may result in a lower valuation of $30 billion, down from $46 billion. Klarna has dismissed this speculation as “pure speculation.” The company also experienced losses in the previous year, with an operating loss of SEK6.58 billion ($689 million).
The decision to downsize comes at a time when BNPL services face challenges due to the current economic landscape. While the sector has experienced significant growth, the instability of the global economy poses obstacles for companies like Klarna. Factors such as inflation and geopolitical tensions have weakened consumer confidence, leading to the company’s decision to streamline its workforce.
Although Klarna’s future plans remain uncertain, the company is determined to navigate these challenging times effectively. By focusing on its key priorities and optimizing its workforce, Klarna aims to overcome the current difficulties and continue working towards its ambitious goals.
Sources:
1. Wall Street Journal
2. Business Standard
