free counter
World

Groupon to lay off 500 employees as struggling Chicago-based online marketplace seeks financial turnaround

Groupon is laying off 500 employees, or nearly 15% of its global workforce, because the struggling Chicago-based online marketplace seeks to spend less amid falling revenues.

The full total includes 293 positions linked to the headquarters at 600 W. Chicago Ave., although some employees will work remotely, Groupon spokesman Nick Halliwell said Monday evening.

The business saw a 42% decline in revenue and a $90 million loss through the second quarter, in accordance with an earnings report Monday. The weaker than expected results prompted a $150 million cost-cutting strategy which includes rationalizing its property footprint, transitioning to a self-service merchant sales platform and reducing how big is its technology and sales teams.

Groupon CEO Kedar Deshpande sent a letter to employees Monday outlining the plans to streamline the price structure, like the difficult to digest news of the impending layoffs.

Quite simply, our cost structure and our performance aren’t aligned, Deshpande said in the employee letter, that was obtained by the Tribune. To be able to position Groupon to successfully execute our turnaround plan, we need to lower our cost structure.

Groupon had 3,416 employees by the end of the next quarter, in accordance with its earnings report. The business had a lot more than 11,000 employees worldwide at its peak in 2012.

As well as the layoffs along with other cost-cutting measures, Groupon is closing its Australian Goods business, which runs on another platform compared to the remaining Groupon Goods business, rendering it very costly and complex to control on a continuing basis, Deshpande said in the letter.

The former CEO of Zappos, Deshpande joined Groupon in December because the company, hard-hit by the pandemic, saw its 2021 annual revenue fall by a lot more than 56% from 2019, in accordance with financial filings.

After the face of Chicagos tech startup scene, Groupon has been around decline for a lot of days gone by decade.

Google tried to get Groupon for $6 billion in 2010, but investors said no deal. By spring 2011, Groupon was valued at $25 billion. The existing market capitalization is approximately $415 million.

Launched in 2008, Groupon created its e-commerce niche with heavily discounted daily deals on from manicures to meals, blasted out to subscribers via email. The business enterprise model subsequently expanded to add stocking and shipping products through the products platform, which put it in direct competition with online retail giant Amazon.

The business has since shifted exclusively to a third-party business design and today promotes itself being an online local marketplace where consumers head to buy services and experiences. Recent Chicago-area offerings add a Chicago River boat tour, discounts on Krispy Kreme Doughnuts in Homewood and a pole dancing class in Aurora.

In the next quarter, Groupon generated global revenue of $153 million, down from $206 million through the same period this past year. The business had projected $670 million to $700 million in revenue for 2022, but withdrew its full-year guidance Monday due to the turnaround strategy and the uncertain macroeconomic environment, in accordance with earnings reports filed with the Securities and Exchange Commission.

Deshpande said in his employee letter that almost all the cost-cutting actions would happen this season.

Departing employees were notified Monday, with some asked to remain on for a period to aid with the transition, based on the letter. Where possible, they’ll be given the choice to help keep their laptops, avail themselves of outplacement services and submit their information to a Groupon talent list to be posted on LinkedIn.

Information on severance packages weren’t disclosed.

rchannick@chicagotribune.com

Read More

Related Articles

Leave a Reply

Your email address will not be published.

Back to top button

Adblock Detected

Please consider supporting us by disabling your ad blocker