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LivingSocial cuts 10% of workforce but claims travel business “is doing great”

@denschaal

Nov 29, 2012 1:13 pm

Skift Take

Gutting 10% of the workforce isn’t much of a holiday package from LivingSocial. But it does highlight that the winnowing continues in the daily deals sector.

— Dennis Schaal

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Daily deals company LivingSocial cut 400 jobs, mostly in the U.S., but claims its travel business, Escapes, “is doing great.”

The layoffs amount to around 10% of the workforce.

“Escapes is doing great, and there’s no change in strategy and focus related to it,” said spokesperson Andrew Weinstein, following the layoff news. “Doug Miller [senior vice president, new initiatives] is still here, and we’re still moving along with aggressive expansion plans for his whole portfolio.”

Escapes, which along with deals and shopping make up the company’s three business lines, often include a flash-sale hotel stay paired with a spa or restaurant credit, for example.

Despite Weinstein’s articulated optimism about Escapes, the business has to be hurt by the job cuts, which came primarily in sales, customer service, and editorial staff.

The downsizing occurs as LivingSocial feels the blowback from its aggressive growth strategy, and relocates workers from its headquarters in Washington, D.C., to a new call center in Tuscon, the Los Angeles Times reports.

LivingSocial recorded an operating loss of $565 million in the third quarter on $124 million in revenue, AllThingsD reports. Those earnings — or losses — were available for privately held LivingSocial because Amazon is an investor and reports some of LivingSocial’s financials.

In a 10-Q SEC filing, Amazon, which took an impairment charge on its LivingSocial stake, states that the book value of its investment in LivingSocial through the third quarter was $94 million.

In the two years since LivingSocial launched its Escapes business, it claims to have booked more than 1.5 million room nights; sends 16,000 travelers on trips each week, and has worked in tandem with more than 2,000 merchants.

LivingSocial’s woes occur amidst a continuing shakeout in the daily deals space. Groupon, a LivingSocial competitor, is currently mulling a CEO change.

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