Groupon Inc., fresh off announcing a second-quarter net loss of more than $90 million, said it's going to execute a new "turnaround strategy" that involves laying off 500 people.
The Chicago-based e-commerce marketplace (Nasdaq: GRPN) said the new strategy is aimed at "reducing our cost structure and fundamentally improving our marketplace experience to support long-term growth."
The company announced an adjusted second-quarter loss of 34 cents per share.
"Our overall business performance is not at the levels we anticipated, and we are taking decisive actions to improve our trajectory," said Gropon CEO Kedar Deshpande in a statement. "We are significantly reducing costs, and based on the progress we're making on our initiatives to drive customer purchase frequency, we are now ready to begin reinvesting in marketing to drive growth."
Deshpande was named Groupon CEO in December after previously serving as CEO of Zappos.
Groupon said in a filing with the Securities and Exchange Commission that it is implementing a multi-phase cost-saving plan. The first phase includes laying off 500 employees, with the majority of the job cuts occurring by the end of 2022 and the remainder in early 2023. The company employed 3,675 people as of Dec. 31, 2021, according to its annual report.
The company also said it will cut its technology spending by $60 million annually, or 30%.
By "right-sizing our tech organization to align with our current and future business needs," per the company, "we believe we can take $150 million in annual costs out of our business by the end of 2023," said interim CFO Damien Schmitz.
Downsizing could also be in the cards, as Groupon's plan also calls for "rationalizing our real estate footprint across markets to align with the size of the current business and a hybrid work model."
In the SEC filing, the company blamed "the ongoing Covid-19 pandemic, inflationary pressures, higher labor costs, labor shortages, supply chain challenges and resulting changes in consumer and merchant behavior" for its cost-cutting drive.
