Chicago-based e-commerce marketplace Groupon (NASDAQ:GRPN) plans to lay off nearly 500 employees globally as part of its multi-phase restructuring plan. This marks the second round of layoffs for the company following the elimination of 500 jobs, announced in August 2022.
Majority of the second round of layoffs are expected to occur by the end of the second quarter. The company expects to incur charges of $10 million to $20 million related to the second phase of job cuts. It incurred pre-tax charges of $9.6 million since the beginning of the 2022 Restructuring Plan through December 31, 2022.
Groupon expects the second phase of its 2022 Restructuring Plan to generate annualized cost savings of about $70 million. It also aims to take other non-payroll initiatives under its cost saving program, including reducing technology, software, and certain professional services costs. These initiatives are projected to generate additional annualized cost savings of $30 million.
Groupon started as an online platform offering coupons, group deals, and cashback on purchases, helping restaurants and retailers to attract customers. However, the company’s strategy to sell goods and compete with the likes of Amazon (AMZN) backfired badly.
The company then tried to shift to its basic business model but the transition has not been easy. Revenue declined 39% to $451 million in the first nine months of 2022 and the company slipped to a loss per share of $6.06 from EPS of $2.80 in the prior-year period.
Is Groupon Stock Worth Buying?
Wall Street has a Moderate Sell consensus rating on Groupon based on one Hold and two Sells. The average GRPN stock price target of $9.17 implies upside of nearly 10%. Shares have plunged more than 72% over the past year.
