Online used vehicle retailer Shift Technologies cut its headcount by 30% in the first quarter as the company sought to reduce costs and eliminate duplicate positions after its merger with CarLotz, CEO Jeff Clementz said during an earnings call.
The layoffs came as the company saw it sales plummeted in the fourth quarter and operational losses are increasing.
Shift closed the merger with CarLotz in December, immediately eliminating duplicate costs and roles, Clementz said on Tuesday’s earnings call. In early February, the company decided to end CarLotz’s presence on the East Coast and close its Downer Grove, Illinois location to focus on its core West Coast markets. A remaining CarLotz location in Pomona, California will remain open. Shift also has three locations in Los Angeles, San Francisco Bay Area and Portland.
“While it was difficult, we reduced headcount by about 30% in the first quarter,” Clementz said on the call. “Besides business functions, most of the reductions were due to our move to a decentralized sales organization, which took place in February.” He added that the “CarLotz integration and strategic moves to increase our SG&A expenses are largely behind us.”
Shift Technologies, which went public in 2020 through a merger with a special acquisition company, reported generating $65.6 million in revenue in the fourth quarter, down 67% from the same period a year ago. Shift reported an operating loss of $60.7 million in the fourth quarter, up 14% from the same period in 2021.
Shift reported a net profit 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 $76.7 million one-time gain from the CarLotz acquisition . Shift had a net loss of $172 million in 2022, up from the $162.2 million loss it reported the year before. Notably, the company’s gross profit per unit dropped 42% between 2021 and 2022 to $1,208 per vehicle.
The earnings report caused Shift’s shares to fall. The stock fell nearly 28% to $1.21 on Wednesday. However, the share price still fluctuates above $1, which allowed the company to regain its share price Nasdaq Listing Requirement.