LivingSocial Cuts 400 Staff Positions in Cost-Saving Move

LivingSocial Inc., the second- biggest provider of online daily deals, is cutting about 400 of its 4,500 employees, while it plans to increase spending in the areas of marketing and mobile.

The cuts, which affected mostly sales and customer-service positions in the U.S., were announced today, said Andrew Weinstein, a spokesman for the Washington-based company. The moves were the result of a recent operational review in which management also approved 100 new hires and increased spending in certain areas of the business to target growth.

LivingSocial is using job cuts to help it cope with the slump in demand for online coupons that has resulted in losses and forced part-owner Amazon.com Inc. (AMZN) to write down the value of its 29 percent stake. Groupon Inc. (GRPN), the leader in online coupons, is suffering too, as slowing growth and other challenges have caused the stock to fall 77 percent since its November 2011 initial public offering.

“We wanted to align our cost structure with the company’s plans for 2013,” Weinstein said in a telephone interview. “We also wanted to ensure that we had sufficient resources to invest in priorities like marketing and mobile while continuing toward long-term growth and profitability.”

The company plans to hire staff in areas including mobile technology. Eric Eichmann, president of the international business unit, is also leaving, Weinstein said. Eichmann didn’t respond to a request for comment.

Amazon reported a third-quarter charge of $169 million related to its stake in LivingSocial. The online retailer had invested $175 million in the coupon service in 2010.

To contact the reporter on this story: Douglas MacMillan in San Francisco at dmacmillan3@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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