Groupon announced Tuesday it is cutting about 10% of its workforce and shutting down its operations in Puerto Rico and six countries as part of its strategy for long-term growth.
The company said in a regulatory filing it would take a pre-tax charge of $35 million in connection with eliminating about 1,100 jobs globally, mostly in its “deal factory” and customer service operations. At the end of December, it employed about 11,800 people.
In addition, Chief Operating Officer Rich Williams said in a blog post that Groupon was ceasing operations in Morocco, Panama, The Philippines, Puerto Rico, Taiwan, Thailand and Uruguay. The closures follow recent exits in Turkey and Greece and the sell-off of a controlling stake in Groupon India to Sequoia.
“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, Williams explained. “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.”
“These are tough actions to take,” he acknowledged, but “just as our business has evolved from a largely hand-managed daily deal site to a true e-commerce technology platform, our operational model has to evolve.”
Reuters noted that a strong dollar “has hurt companies with a large presence in markets outside the United States.” Markets outside North America accounted for about 43% of Groupon’s revenue in 2014.
Groupon, once the leader in the online coupons market, has also been struggling to boost sales as competitive deals on online marketplaces operated by Amazon.com and eBay make its coupons less attractive to shoppers, Reuters said.
“I think it’s actually a good thing for investors to hear that they’re taking some more cuts out of their international operations,” Topeka Capital Markets analyst Blake Harper said.
Groupon stock on Tuesday closed down about 2% at $4.08. Up to Monday’s close, it had fallen 79% since November 2011, when the company went public in what was then the largest initial public offering by a U.S. Internet company after Google’s listing.