Group deals are no more attractive, the industry is currently facing a downturn in the face and Groupon and LivingSocial are being hit the hardest. Groupon’s fourth-quarter results announced this past Wednesday caused its shares to plunge 23 percent.
The company announced Wednesday that revenues for the first quarter would be between $560 million and $610 million, which was short of the $650 million. For its fourth quarter, Groupon posted revenues of $638.3 million, which was up 30% year-over-year, but short of the expected $640 million.
After posting poor earnings in a conference call on Wednesday, Groupon founder and CEO Andrew Mason will be departing as CEO. Mason confirmed in a blog post that he was fired. The company said in press release:
“Groupon, the global leader in local commerce, today announced a leadership change in which Executive Chairman Eric Lefkofsky and Vice Chairman Ted Leonsis have been appointed to the newly created Office of the Chief Executive, effective immediately, replacing Andrew Mason. Lefkofsky and Leonsis will serve in this role on an interim basis.
Andrew Mason in the blog post also stated:
After four and a half intense and wonderful years as CEO of Groupon, I’ve decided that I’d like to spend more time with my family. Just kidding – I was fired today. From controversial metrics in our S1 to our material weakness to two quarters of missing our own expectations and a stock price that’s hovering around one quarter of our listing price, the events of the last year and a half speak for themselves. As CEO, I am accountable. This leadership change gives you some breathing room to break bad habits and deliver sustainable customer happiness – don’t waste the opportunity!
In a similar story, LivingSocial, Groupon’s major competitor laid off 400 employees — 10% of its workforce, during the holidays and posted a net loss of $650 million for the year.
Traditional daily deal sites need to find an innovative model to survive, because as it stands now the industry is dipping faster than expected.
“Zulily is one of the fastest-growing businesses we’ve ever encountered, which really shouldn’t be a surprise given the founders’ previous success at the pioneering online diamond retailer Blue Nile,” said Jeff Jordan, partner, Andreessen Horowitz, in a release.
Well, a lot was said about Groupon when it started growing really fast and making huge revenues in the early years. Zulily could stand the test of time, and only time itself can will tell if it can.
Image courtesy lifehacker.com