Some vital downsizing is underway at Groupon, the daily deals and local-commerce site. The company is today announcing that it will be cutting 1,100 jobs — mostly in its sales (aka “deal factory”) and customer service operations — taking a pre-tax charge of $35 million in the process. As part of the restructure, Groupon is also ceasing operations in several markets internationally: Morocco, Panama, The Philippines, Puerto Rico, Taiwan, Thailand and Uruguay will all be closing.
“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,” COO Rich Williams noted in a blog post the company just put up on the news. Before the closures, Groupon was active in over 40 countries.
The short statement Groupon has filed with the SEC notes that between $22 million and $24 million of the charges will come in Q3 2015, and that the full restructure should be completed by September 2016.
“Substantially all of the pre-tax charges are expected to be paid in cash and will relate to employee severance and compensation benefits, with an immaterial amount of the charges relating to asset impairments and other exit costs,” the company notes. Cost savings from the cuts, Groupon says, will be reinvested in the business.
For the past several years, Groupon has been on a long-term mission to rebalance its strategy from a focus on daily deals to a more diverse business based around local commerce. The company has had mixed success, though. There have also been reports that the company is planning to downsize some of those product efforts. Those have also resulted in some recent layoffs.
Williams noted in his blog post that while there is some downsizing the company is not using the layoffs to reposition the bigger business as it repositions the technology that runs it. “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,” he wrote.