Klarna said it is reducing its 7,000–strong global workforce by 10% as it warned of a “likely recession”, blaming the war in Ukraine, changes in consumer confidence, surging inflation and a volatile stock market.
Employees at the Swedish buy now, pay later group were told about the job cuts in pre-recorded video message on Monday.
“When we set our business plans for 2022 in the autumn of last year, it was a very different world than the one we are in today,” Sebastian Siemiatkowski, Klarna’s CEO and co-founder, said in the message.
“Since then, we have seen a tragic and unnecessary war in Ukraine unfold, a shift in consumer sentiment, a steep increase in inflation, a highly volatile stock market and a likely recession."
The CEO said the decision to cut jobs was one of the “hardest” the company has had to make.
"What we are seeing now in the world is not temporary or short-lived, and hence we need to act," he said.
Buy now, pay later services allow shoppers to spread the cost of purchases over a series of interest-free instalments.
But rising inflation and interest rates are shrinking consumers’ budgets, forcing them to spend less and thus affecting companies like Klarna.
Last week, the Wall Street Journal reported that Klarna is looking to raise a new round of funding that would value the company at US$30bn, well below the US$46bn the company was valued at nearly a year ago.