Klarna planning to cut 10pc of its global workforce

Consumer credit provider Klarna is planning to axe 10% of its staff, it was reported on Tuesday, as the company warned that a recession looked likely.

According to BBC News, the Swedish buy-now-pay-later specialist was planning to cut about 700 of its 7,000-strong global workforce, amid red-hot inflation, plummeting consumer sentiment and the ongoing war in Ukraine.

“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,” said chief executive officer Sebastian Siemiatkowski.

Klarna staff had been asked to work from home this week in a bid to allow affected staff some privacy.

It said the employees being cut in Europe would be offered “associated compensation”, but warned that those elsewhere would go through a different process “depending on where you work”.

Klarna’s fortunes have fluctuated in recent years, after the company’s valuation rocketed in 2020 amid the move to online shopping and a shift in the way consumers spend.

The company’s bread-and-butter is the offering of interest-free credit at point-of-sale, giving customers the option to pay for items in 30 days, or in three monthly instalments.

Its primary source of revenue is through fees charged to retailers.

Klarna’s operating losses have ballooned in the last year, however, to SEK 6.58bn (£540m) from SEK 1.62bn.

Earlier in May, the Wall Street Journal reported that the company was looking for fresh investment, and suggested its valuation could slide by as much as $16bn to $30bn, although Klarna described the report as “pure speculation”.

Reporting by Josh White at Sharecast.com.