Groupon’s Revenue Forecast Trails Analysts’ Estimates

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Groupon Inc. forecast second-quarter sales that trailed analysts’ estimates, citing “significant headwinds from foreign exchange rates.”

Revenue will be $700 million to $750 million and earnings excluding some items will be 1 cent to 3 cents a share, Chicago-based Groupon said Tuesday in a statement. Analysts projected sales of $763 million and profit of 3 cents a share, the average of estimates compiled by Bloomberg.

The U.S. dollar’s strength has crimped the company’s efforts as it transforms into a broader e-commerce site from its origins offering daily deals. Groupon gets about 40 percent of revenue from outside the U.S. First-quarter sales of $750.4 million trailed the average estimate of $761.1 million. In the past year, the dollar has gained 24 percent against the euro and 17 percent against the yen.

Groupon’s shares fell 2 percent to $6.70 in late trading after closing down 2.8 percent to $6.84 in New York. The shares have declined 17 percent this year.

The company said analysts weren’t accurately accounting for the previously announced sale of a controlling stake in Ticket Monster, its South Korean e-commerce business. Groupon’s forecast reflects revenue and earnings excluding Ticket Monster.

Groupon sold the stake last month to investment firm KKR & Co. and Hong Kong-based Anchor Equity Partners for $360 million. Groupon said at the time it expects to gain $195 million to $205 million on a pretax basis.

Some ‘Distractions’

“Being able to reduce some of these distractions” will help Groupon focus on its core markets in North America and Europe, said Jeffrey Houston, an analyst at Barrington Research Associates Inc..

Groupon will likely look to sell other parts of its business as well, including e-commerce site Ideel, according to Gene Munster, an analyst at Piper Jaffray Cos.

“Their aspiration is that people think of Groupon as a combination of Amazon, Expedia and That’s a tall order,” said Peter Krasilovsky, chief analyst at researcher BIA/Kelsey in Chantilly, Virginia. “The jury is still out about the success of the marketplace. We are looking at whether they are able to attract major merchant and brands, that’s a key indicator of their success.”