Groupon’s full-year revenue forecast hit by strong dollar

Firm faces stiff competition from smaller companies as well as online giants such as Amazon

Groupon, which gets 160 million visitors globally per month, saw a drop in active customers to 48 million. Photograph: Daniel Acker/Bloomberg

Groupon, which gets 160 million visitors globally per month, saw a drop in active customers to 48 million. Photograph: Daniel Acker/Bloomberg

 

Groupon forecast full-year revenue well below analyst expectations on Tuesday, hurt by a stronger dollar and weaker-than-expected billings, a key metric reflecting the gross amount collected from customers.

Groupon, which once dominated the fast-growing online coupons arena, has been struggling to rev up sales and profit as it battles stiff competition from smaller companies as well as online giants such as Amazon. com.

In April, the daily deals and online retailer agreed to sell a 46 per cent stake in its South Korean business as part of its turnaround efforts.

Chief executive Eric Lefkofsky told Reuters in an interview on Tuesday the company will evaluate alternatives that would help unlock shareholder value in countries where Groupon questions its long-term strategic positioning, as it did in Korea.

The company, which gets 160 million visitors globally per month, saw a drop in active customers to 48 million as of March 31 from 54 million as of December 31st, 2014. On an adjusted basis after the stake sale, active users increased marginally quarter-over-quarter, to 48.1 million from 47.4 million.

Mr Lefkofsky said the company aims to double the number of deals over the next year so that Groupon always has deals on offer within its top categories.

“To date, we’ve had a one-size-fits-all approach when it comes to merchants, and over time, we’ve come to realize it’s too limiting,” he said.

Groupon forecast 2015 revenue of between $3.15 billion and $3.3 billion, below the $3.53 billion analysts on average were expecting, according to Thomson Reuters.

“The deterioration in sales growth is a concern for Groupon,” Neil Saunders, chief executive of research firm Conlumino, said. “If repeated across the remainder of this year it will make the group’s quest for profitability even more challenging than it has been to date.”

The company said it expected changes in foreign exchange rates to hurt its year-over-year revenue growth rate by 700 basis points.

Groupon reported gross billings of $1.55 billion for the first quarter, well below the average analyst estimate of $1.86 billion, according to market research firm FactSet StreetAccount.

Net loss attributable to common stockholders narrowed to $14.3 million, or 2 cents per share, for the quarter ended March 31, from $37.8 million, or 6 cents per share, a year earlier.

Excluding items, the company earned 3 cents per share, beating an average analyst estimate of a profit of 1 cent per share, according to Thomson Reuters.

Revenue rose to $750.4 million from $728.4 million.

The company’s stock fell 2 percent to $6.70 in extended trading.

Reuters