) jumped 3.89% (34 cents) to close at $9.09 on Dec 3, 2013, after
the online daily deals provider announced blockbuster holiday
Groupon stated that sales in this four-day holiday weekend was
its biggest since its inception. Billings were up 30.0% from the
year-ago period and more than 50% transactions (55.0% of North
American transactions) were carried out through mobile devices.
According to Groupon, toys, electronics and home goods were
top-sellers during the period. The strong sales were primarily
attributed to a redesigned website as well as the lucrative deal
offerings during the weekend.
Groupon's policy of remaining open on Thanksgiving and launching
the Holiday Gift Shop for
) iOS and
) Android app paid off, in our view.
The company's offering of more than $100.0 million in Groupon
Credits (also known as Groupon Bucks) and the launch of freebies
just prior to Thanksgiving also attracted holiday customers.
Freebies include digital coupons, promotion codes, sales,
giveaways and samples, from more than 5,500 brands in the United
States. The company plans to expand the offering to some key
international markets in 2014.
The new category reflects Groupon's strategy of diversifying its
business in addition to the core daily deals segment. However,
the coupons will take some time to contribute meaningfully toward
the top-line growth.
This is due to the fact that unlike daily-deals (revenues earned
upfront), Groupon will earn revenues from coupons only if
customers redeem them and purchase goods from the retailer.
Nevertheless, the strong holiday season sales will boost
Groupon's upcoming quarterly results. For the fourth quarter of
2013, Groupon forecasts revenues to be in the range of $690.0
million to $740.0 million. The company expects the bottom line to
range from breakeven to earnings of 2 cents per share
Although mobile presents ample growth opportunity, increasing
competition from more established players such as
) remains a major concern. Moreover, a volatile macroeconomic
environment and continued investments to expand its merchant base
are expected to impact near-term results.
Currently, Groupon carries a Zacks Rank #3 (Hold).
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