Groupon's slide continues, as "pink slips" fly
Groupon (GRPN) said Tuesday it will lay off 1,100 workers, highlighting the online-discount company's steep descent from its days as a high-flying Internet startup.
Moving to cut costs, Groupon said in a regulatory filing that the positions will be eliminated by September 2016 and that it will take a charge of up to $35 million to account for the severance and other compensation costs.
In a post on Groupon's corporate blog, Groupon chief operating officer Rich Williams said most of the layoffs will be in the company's overseas units. After recently having ceased operations in Greece and Turkey, it will also withdraw from Morocco, Panama, the Philippines, Puerto Rico, Taiwan, Thailand and Uruguay.
"We saw that the investment required to bring our technology, tools and marketplace to every one of our 40-plus countries isn't commensurate with the return at this point," he wrote. "We believe that in order for our geographic footprint to be an even bigger advantage, we need to focus our energy and dollars on fewer countries."
Groupon's financial performance has been mixed this year. For its latest quarter, the company in August reported net income of $109.1 million, reversing a $22.8 million loss from the year-ago period. But revenue of $738.4 million for the period came in just shy of analysts' forecasts.
Groupon shares have lost nearly half their value this year, dipping 2.7 percent to $4.06 as of 11:57 a.m. Eastern time. When the company went public in November 2011, its shares shot up more than 40 percent from an initial offering price of $20.
Groupon co-founder Andrew Mason started the Chicago-based company in 2008 as a daily email service that helped consumers get coupons for products sold by local businesses. The idea quickly caught on. Over the next two years, Groupon spread to more than two dozen U.S. cities and into Europe.
But by 2012 growth at Groupon had slowed sharply, with the company still bleeding red ink. Mason was fired in 2013 and replaced as CEO by co-founder Eric Lefkofsky amid investor unrest about the company's decline.
Since then, Groupon has sought to refashion itself as a mobile-commerce provider focused on local businesses. "While our turnaround is not yet complete, we're making headway," Lefkofsky told analysts during the company's Aug. 7 earnings call.