Shopify sees slower revenue growth, higher spending; inventory tank Reuters – zimo news


© Reuters. FILE PHOTO: An employee works at Shopify’s headquarters in Ottawa, Ontario, Canada, on October 22, 2018.REUTERS/Chris Wattie/File photo

(Reuters) – Canada’s Shopify (NYSE: Inc) on Wednesday forecast slower revenue growth in the first half of the year and said it was ramping up spending on its network of fulfillment centers, sending its shares tumbling 18%.

The company’s forecast suggests the e-commerce boom seen at the height of the COVID-19 pandemic is cooling as more shoppers return to stores, prompting retailers to focus on brick-and-mortar operations.

To make the online shopping experience more valuable during the pandemic, small and medium-sized retailers have invested heavily in stunning websites, robust networks and faster delivery using software tools, as well as payment services from companies like Shopify.

But as growth slows, Shopify is trying to build an integrated e-commerce model focused on logistics and warehouses to support its core business.

“We’re really moving our web model to higher-capacity hubs, and we want to leverage more resources ourselves,” said Shopify President Harley Finkelstein.

“Being able to provide (fulfillment), affordable 2-day shipping to 90% of the U.S., that’s the real goal.”

Shopify said it expects capital spending of $200 million in 2022 as the business expands and could spend about $1 billion on warehouse centers over the next two years.

While Shopify’s capital spending forecast for 2022 was higher than expected, its focus on fulfillment centers makes sense, said DA Davidson analyst Thomas Forte.

Revenue rose 41 percent to $1.38 billion in the fourth quarter ended Dec. 31, compared with analysts’ estimates of $1.33 billion, according to Refinitiv data.

Excluding items, it earned $1.36 per share, 9 cents above expectations.

Shopify lost its title as Canada’s most valuable company after its shares fell by more than a third this year.

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