StockX is facing troubles amid the coronavirus pandemic.

The company laid off 12% of its workforce on Thursday.

Internal sources estimated that there have been seven confirmed COVID-19 cases throughout the company. A StockX representative could not confirm this.

The resale platform kept its Detroit center open for a full day in March after Michigan Gov. Gretchen Whitmer on March 23 signed a statewide executive order to suspend all business operations not necessary to sustain or protect life.

"As we navigate the unprecedented impact on the world and on our business, we have worked tirelessly to put measures in place to ensure the safety of our team members as well as business continuity," a StockX representative said in a statement. "Executive orders involve a lot of nuance and require companies to react quickly without perfect certainty as to their interpretation."

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When the coronavirus pandemic started hitting retail, StockX looked like it was poised to weather the storm.

The leading resale platform for sneakers and other luxury goods, which bills itself as a "stock market for things," was valued at $1 billion as of July. And when StockX CEO Scott Cutler spoke with Tech Crunch in a March 27 interview, he said his business had benefited from the turbulent events over the past few months.

"We've had more and more traffic and buyers coming to our site because in some respects, traditional retail in some geographies is not available," Cutler told Tech Crunch. "We thought we've always been a marketplace of scarcity, but now you can't actually go into a real retail location, so you're coming to StockX."

A StockX spokesperson later said Cutler's comments in the article were taken out of context.

The same day the interview was published, Cutler addressed his employees in a virtual companywide Q&A meeting, a recording of which was obtained by Business Insider. In the meeting, Cutler acknowledged concerns from workers across multiple levels of the company, from the corporate office to the authentication centers.

One question, which was asked toward the end of the nearly 25-minute call, summed up the tone of the company at the time: "Are we trading safety for profits as a company?"

While Cutler assured employees that safety was the company's No. 1 priority, much of the meeting was devoted to discussing the conditions in the company's still functioning authentication centers and how they were managing to fulfill transactions with one less center open in the US.

Nearly one month later, StockX laid off 12% of its workforce, or at least 100 employees from its quality-assurance, engineering, product, and operations teams at its Detroit headquarters and Arizona office. But information obtained by Business Insider from the Q&A and internal company emails showed that issues at the company were present since late March.

Beyond the company's celebrated high customer demand, StockX has not been immune to the impact of the coronavirus. The company has been plagued by issues amid the pandemic, including safety concerns, an overload of product in authentication centers, and several employee COVID-19 cases.

Authentication centers are the lifeblood of StockX

StockX operates six authentication centers globally, four of which are in the US in Georgia, New Jersey, Arizona, and Detroit. These centers, to which buyers ship their products to be verified and reboxed by StockX authenticators, are where the essence of the platform's status as a resale middleman comes to life.

This might be why StockX did not initially close its Detroit warehouse after Michigan Gov. Gretchen Whitmer directed all businesses and organizations that are not necessary to sustain or protect life to temporarily suspend operations in her "Stay Home, Stay Safe" order, which was effective at 12:01 a.m. on March 24.

In an email to StockX employees on March 23, StockX cofounder and Chief Operating Officer Greg Schwartz said StockX's Detroit center would remain open, despite the stay-at-home order. The email cited a similar executive order in New Jersey, which was not affecting operations at the company's authentication center in Moonachie.

However, StockX eventually decided to close its Detroit center on March 25, according to an email sent to StockX employees that day about 2:00 p.m.

In the email, which was also viewed by Business Insider, Schwartz said the Detroit authentication center would be closed starting on March 25 after "further review" of the order.

StockX

"After further review of the verbiage in the executive order issued by the State of Michigan, we have decided to proactively take the step to temporarily shut down operations in Detroit AC, effective today," the email said, later adding, "Since the beginning of this COVID-19 journey, we communicated our commitment to following the guidelines outlined by local government and health authorities, while also understanding the critical importance of continuing to operate our business. Today's decision, while difficult, is proof of that, and I'm appreciative of the capable and dedicated teams driving our operations to ensure our customers get the service they deserve."

According to a StockX representative, the executive order garnered much initial confusion as to which people were still allowed to go into work. A Q&A form was eventually distributed to clarify the order.

"Executive orders involve a lot of nuance and require companies to react quickly without perfect certainty as to their interpretation," the StockX representative said in a statement. "We are committed to being in compliance with executive orders in the areas in which we operate, and will continue to monitor this very fluid, ever-evolving situation, making adjustments as necessary."

Sources say 7 employees in have tested positive

Internal sources estimated that StockX has had seven confirmed cases of COVID-19 within the company. A StockX representative said they could not confirm that number.

In a statement, the StockX representative said the company has worked tirelessly to ensure the safety of its employees and business. StockX announced in a public blog post on March 30 that it established new practices to help keep its authentication centers safe and functional during the pandemic, including a reduced number of people working shifts at a time and the implementation of advanced cleaning procedures. StockX also asked workers who said they had coronavirus symptoms to stay home for a 14-day period of paid leave to self-quarantine.

In his Q&A with employees on March 27, Cutler said an employee who worked at StockX's Detroit authentication center had tested positive for COVID-19 on March 26 and that another employee at a New Jersey center had also tested positive.

"We have had team members — in particular in our authentication center in Moonachie, we had a team member yesterday in Detroit — that did test positive for COVID-19," Cutler said.

The Detroit employee had not been at work for multiple days before his positive test, and his last day at work had been before the executive order was in place, the representative said. StockX also made the decision to close its Detroit warehouse before there were any confirmed cases at the company.

Other authentication centers are being overloaded with product

Even before Michigan's statewide order was issued, the company was already preparing for an influx of product in its Detroit warehouse. In an email sent to workers on March 20, a StockX human-resources employee asked non-operations StockX employees to volunteer their time to help take care of unboxing and boxing products in the Detroit center.

"Our Detroit operations team could use some extra hands at the Authentication center in the coming weeks starting this Monday, March 23," said the email, which provided a list of health requirements for a volunteer to be eligible to work in the center.

The center closed five days later on March 25. For business to continue as usual, packages had to be rerouted to other centers. This led to an increase in volume at the other three open centers across the US.

"We have really tried to make sure that we're clearing out all of the volume that's coming into the network every single day," Cutler said in his March 27 Q&A. "And we've actually had days where we've not been able to do that even across multiple shifts, and that's just a reality of the situation, that we're going to be managing through that."

Cutler added that the company was working with third-party logistics providers to manage the inventory coming into its three open US authentication centers.

StockX cofounder Josh Luber, left, and CEO Scott Cutler. Hollis Johnson/Business Insider

Some employees fear 'profit over people'

After the Detroit center closed, the concern for employees in the authentication centers was at the forefront of everyone's mind. While most corporate StockX employees had shifted to remote work, people were still going into work in three warehouses across the US, where they were expected to handle multiple packages a day from all over the country.

In his March 27 Q&A, Cutler addressed an observation by one authentication-center worker who suggested it did not look like the company was practicing social distancing and described people working close together and gathering in groups.

"We (Stock-X) are currently part of the problem and not the solution," said a message sent to the company's Slack channel meant for workers to leave questions for Cutler to answer during his briefings, a screenshot of which was viewed by Business Insider. "By having our facilities continue to stay open we are on the wrong side of history."

The message, which Cutler appeared to directly address in his March 27 Q&A, added, "There's no way to market or PR spin our way out of this. It's literally life or death. People or profit."

Cutler said the company was encouraging social distancing in its centers and asking people to stay home when sick. He added that continuing operations across the company during the outbreak was the only way the company could provide employment.

In response to a question about whether the company was trading the safety of its team for profit, Cutler said: "A hundred percent no."

If you're a StockX employee or someone with a story to tell, contact this reporter at via email at sciment@businessinsider.com or by encrypted messaging app Signal at +1 (646) 376-6018 using a nonwork phone.