Groupon on Friday cited an unexpected number of refunds in the latter part of 2011 for a surprise revision in its fourth quarter results. The announcement prompted an 8.5% drop in the company's stock in after-hours trading.
The revisions cut Groupon's previous 4Q revenue results by $14.3 million to $492.2 million from $506.5 million. Net income also fell by $22.6 million, or 4 cents a share.
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The restatement was apparently driven by higher-than-anticipated refund rates. "The revisions are primarily related to an increase to the company's refund reserve accrual to reflect a shift in the company's fourth quarter deal mix and higher price point offers, which have higher refund rates," reads a statement from the company. Translation: The company had not set aside enough money for refunds to customers.
Groupon, whose accounting has been questioned by the SEC, says it has hired accounting firm Ernst & Young to oversee its operations in 2011 and has been working with another unnamed "global accounting firm."
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The latest restatement comes after a topsy-turvy ride for the company's stock since it went public on Nov. 4. Before the latest announcement, the stock was trading at $18.38-- $1.62 less than its opening price.
Image courtesy of iStockphoto, cruphoto
This story originally published on Mashable here.
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