LivingSocial, an online daily deal company confirmed previous reports regarding the layoff of hundreds of its employees.
According to Andrew Weinstein, spokesperson for LivingSocial, the company would cut its global workforce by 10 percent or discharge 400 workers. A majority of the job cuts would be in the United States and a few from its business operations abroad.
Weistein said LivingSocial is streamlining its workforce, particularly in its editorial and sales departments. The company will also move its customer service operations from Washington D.C. to Tucson, Arizona. The company will have available job openings in the area because of the move, according to Weinstein. Living Social has approximately 956 employees in Washington D.C.
"We've gone through two years of hyper growth from roughly 450 employees to 4,500. The space has gone through such growth that we needed to catch our breath," said Weinstein.
In addition, Weinstein explained, the layoffs would provide additional funding for the company to invest in some of its critical business undertakings, such as mobile. He also pointed out that the company believes that streamlining its workforce is the right decision for the company to achieve its long-term objectives. He said, "We think this actually puts us on the right path for long-term growth and profitability.”
Furthermore, Weistein also confirmed that Eric Eichmann, president of international operations of LivingSocial, is stepping down from his position. According to him, Eichmann’s resignation is not connected to the layoffs.
During the third quarter, LivingSocial reported $566 million net loss, including $496 million related to the decline of the value of its acquisitions and $45 million stock compensation and other expenses. The company spent millions acquiring competitors in other countries as part of its expansion efforts last year. Its revenue during the quarter declined from $138 million to $124 million.
Living Social was established by its CEO Tim O’Shaughnessy in 2007, and it quickly emerged as one of the largest employers in Washington, D.C.
Groupon Inc (NASDAQ:GRPN), another daily deals company is also facing financial difficulties. The stock value of the company declined by 80 percent since its initial public offering (IPO).