Shutterfly will close Shakopee warehouse, lay off nearly 250 workers

Shutterfly is leaving Shakopee.

The digital photo company is closing its warehouse and laying off nearly 250 workers, according to a letter the company sent the Minnesota Department of Employment and Economic Development, made available Thursday afternoon.

The closure and mass layoffs follow plans Shutterfly announced at the beginning of the year to cut about 100 employees at the warehouse as a cost-saving measure.

Employee layoffs will begin in October, with the facility scheduled to close by June 2024.

"This decision was carefully considered as part of our strategy to strengthen our overall business operations and consolidate production into our larger manufacturing hub locations," the company said in a statement. "We fully recognize the impact this decision will have on our dedicated employees, their families and the Shakopee community. While it was a difficult choice, we remain committed to supporting our employees during this transition."

Shutterfly representatives said the company will provide outplacement services to employees, who will also have the opportunity to apply for open positions within the company and receive relocation assistance when applicable.

This spring, Shutterfly also announced it was closing its production facility in Durham, N.C.

Shutterfly — which allows people to make personalized cards, photo books and gifts from their own photos — became private in 2019 when private equity firm Apollo Global Management purchased it for $1.74 billion.

In May, Shutterfly hired Sally Pofcher, who has served as CEO of children's clothing brand Hanna Andersson and stationery company Paper Source, as chief executive.

"I look forward to bringing a renewed focus on exceptional customer experiences, supported by technology and product innovations and enhanced operational excellence," Pofcher said at the time in a company news release.

Shutterfly is based in Redwood City, Calif., and has offices in Eden Prairie. The Shakopee plant opened in 2014 with help from local subsidies, including a $1 million forgivable loan from the Minnesota Investment Fund and more than $700,000 in tax breaks from the county.

The company recently fell out of compliance to receive city tax abatements after its last round of layoffs, Shakopee Mayor Matt Lehman said. High inflation and high interest rates have negatively impacted the debt load of many businesses, he said.

"It's always bad to have job losses in your community, obviously, but I think there's bigger things at play," Lehman said.