Financial News

  • 22 February 2014, 19:12

Groupon Profit Warning Sees Slump In Shares

Discount voucher firm Groupon has seen its shares plummet by more than 13% on the news it is expecting a dip in profits.

The US-based company's stock had risen briefly in after-hours trading after it reported better-than-predicted fourth-quarter results.

But it said profits were set to fall in the current quarter as it spends more to advertise its online marketplace, and following major acquisitions.

Groupon, which floated in 2011, offers coupons which give discount deals on anything from restaurant meals to spa treatments.

Companies sign up to the website as a way of reaching new customers.

The firm, which competes with Amazon.com, eBay and Google, has been building an online marketplace, called Pull, that lets people search for and buy deals in their area.

However, this move means customers can delay their purchases rather than make them on the same day as had previously been the case, which has put pressure on growth.

Chief Executive Eric Lefkofsky said: "We believe that this trend is likely to be with us for a few more quarters until the positive effects from Pull outweigh the short-term pressure this transition creates with our local business."

Groupon will spend $25m (15m) exclusively on marketing Pull in the first quarter.

The firm is also to spend $20m (12m) to integrate the recently acquired Ticket Monster, the South Korean ecommerce platform which it brought for $260m (156m) in November, and Ideeli, the discount fashion site, for which it paid $43m (26m) last month.

The firm's total revenues in the fourth quarter of 2013 rose by a fifth to more than 460m.

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