Groupon to lay off 500 as part of financial turnaround effort
Groupon is laying off 500 employees, or nearly 15% of its global workforce, as the struggling Chicago-based online marketplace seeks to cut costs amid falling revenues.
The total includes 293 positions associated with the headquarters at 600 W. Chicago Ave., although many employees are working remotely, Groupon spokesman Nick Halliwell said.
The company saw a 42% decline in revenue and a $90 million loss during the second quarter, according to an earnings report Monday. The weaker than expected results prompted Groupon to implement a $150 million cost-cutting strategy that includes “rationalizing” its real estate footprint, transitioning to a “self-service” merchant sales platform and reducing the size of its technology and sales teams.
Groupon CEO Kedar Deshpande sent a letter to employees Monday outlining the plans to streamline the cost structure, including the “difficult to digest” news of the impending layoffs.
“Put simply, our cost structure and our performance are not aligned,” Deshpande said in the employee letter, which was obtained by the Tribune. “In order to position Groupon to successfully execute our turnaround plan, we have to lower our cost structure.”
Groupon had 3,416 employees at the end of the second quarter, including nearly 1,100 based out of the Chicago headquarters, according to Halliwell. The company had more than 11,000 employees worldwide at its peak in 2012.
In addition to the layoffs and other cost-cutting measures, Groupon is closing its Australian Goods business, which runs on a different platform than the rest of the Groupon Goods business, making it “too costly and complex to manage on an ongoing basis,” Deshpande said in the letter.
The former CEO of Zappos, Deshpande joined Groupon in December as the company, hardhit by the pandemic, saw its 2021 annual revenue fall by more than 56% from 2019, according to financial filings.
Once the face of Chicago’s tech startup scene, Groupon has been in decline for much of the past decade.
Google tried to buy Groupon for $6 billion in 2010, but investors said no deal. By spring 2011, Groupon was valued at $25 billion. The current market capitalization is about $415 million.