Groupon makes changes at the top
November 3, 2015 04:52 PM
Eric Lefkofsky is out as CEO of daily deal aggregator and web retailer Groupon.
Chief operating officer Rich Williams will take over as CEO, Groupon said Tuesday. Lefkofsky will remain with the company he co-founded as chairman of the board while current chairman of the board Ted Leonsis will become lead independent director. All moves are effective immediately.
Lefkofsky became CEO after co-founder Andrew Mason was ousted in early 2013. During Lefkofksy’s time as CEO, the daily deal e-commerce offering Groupon Goods business has grown 70.5% year over year, to $1.564 billion in 2014 from $917.2 million in 2013. Groupon Goods is No. 30 in the Internet Retailer 2015 Top 500 Guide.
Williams has been chief operating officer since June, having been promoted from president of North America. Prior to joining Groupon in 2011, Williams spent three and a half years at Amazon.com Inc., No. 1 in the Top 500.
“We’ve come a long way in building a leading local commerce marketplace in the last two years,” Lefkofsky said in a statement. “With his deep experience in e-commerce both in and outside of Groupon and expertise in marketing, operations and technology, Rich was the obvious choice to lead Groupon.”
The move comes a month and a half after Groupon, in a filing with the U.S. Securities and Exchange Commission, said it would cut 1,100 jobs internationally, lowering its employee total to just under 9,600.
One of Williams’ immediate priorities will be improving Groupon Goods. In its Q3 2015 earnings filing Tuesday, Groupon reported sales through Groupon Goods of $411.6 million, up 7.9% from $381.5 million during the same time last year.
“We will shift our Shopping category away from lower-margin ‘empty calorie’ products to grow a sustainable, healthy Goods business with stronger margins,” Williams said.
Analysts say they’re skeptical about that in the face of increasing competition.
“To be fair, the margin performance of Goods has improved over the past year – but not by much,” writes Neil Saunders, Managing Director of research and consulting firm Conlumino. “Over future quarters, we see the prospects for margin gains to be slight given that Groupon has to work harder on Goods deals in a market that remains very promotional.”
"The company also plans to de-emphasize lower margin Goods sales (namely less reliance on consumer electronics, which we believe is 30%+ of sales), but we question whether this mix shift is what customers want," Wells Fargo analysts Matt Nemer and Trisha Dill wrote.
For the third quarter ended Sept. 30 Groupon reported:
- Net revenue of $713.6 million, down slightly from $714.3 million during the same time last year.
- Total North America revenue of $463.9 million, up 10.8% from $418.5 million.
- Groupon Goods revenue in North America of $278.8 million, up 16.7% from $239.0 million.