Chicago-based Groupon will lay off 500 workers globally, with many cutbacks local and with more likely to come, the company said Monday.
The layoffs will amount to about 15% of the total workforce, which stood at 3,416 as of June 30. Groupon spokesman Nick Halliwell said that of the 500 jobs to be shed, 293 will be in positions based in Illinois. He could not specify how many will be at the e-commerce company’s Chicago base, 600 W. Chicago Ave., where it already is making office space available on a sublease.
With remote work common, Halliwell said Illinois-based positions could include workers living in another state.
“Put simply, our cost structure and our performance are not aligned. In order to position Groupon to successfully execute our turnaround plan, we have to lower our cost structure,” CEO Kedar Deshpande said in a message to employees. The message was posted as the daily deals provider announced a widening loss during its second quarter amid a precipitous loss of revenue.
Deshpande said the cuts will occur in the North American sales division and technological services, while the Australia Goods division will be closed. He also said Groupon will reduce its real estate footprint to account for hybrid work. Most of the moves will occur this year, he said,
In its earnings release, Groupon said it expects the cutbacks will yield an annual savings of about $150 million. But it said the company hopes to implement another $50 million in savings by the end of 2023.
The company said its second-quarter loss was $91.2 million vs a loss of $3.4 million for the same period last year. Revenue for the quarter fell 42% to $153.2 million.
Groupon shares closed Monday at $13.87, up about 8% for the day. The shares have been steady losers since the stock went public at $20 in 2011. The shares this year are down 47%.
In his message to employees, Deshpande said laid-off workers will be offered severance and outplacement assistance. For employees who remain, he insisted the company will emerge stronger from its restructuring.
“We are well positioned to transform our company and we are laying the foundation for growth. Together, we can create a fundamentally better experience for our customers and merchants,” he said.
