Groupon Cuts 2014 Outlook as Marketing Costs Jump

Groupon Inc (NASDAQ:GRPN) slashed its full-year profit outlook on Tuesday, citing the need to spend abundantly on marketing to power the once-high-flying Internet coupon company's transition to a more comprehensive online retailer.

The outlook did little to calm some investors' fears over when Groupon's turnaround will gain traction and if its ambition to be "the starting point for mobile commerce" is too lofty.

Groupon shares slid almost 18 percent in after-hours trading on the Nasdaq, wiping out the gains of about 14 percent that had been logged since the start of last week.

In an interview, Chief Financial Officer Jason Child said the company opted to maintain marketing spending because it was starting to see good results toward the end of the second quarter and in early July.

"We've recently been dialing up our marketing expenses, and over the last couple of months, we've really liked the returns that we've been seeing," Child said.

Groupon says it now expects adjusted earnings before interest, taxes, depreciation and amortization of more than $270 million in 2014. In May, Groupon lifted its outlook for adjusted EBITDA to more than $300 million.

For the second quarter, the company reported an adjusted profit of 1 cent per share, in line with Wall Street expectations, according to Thomson Reuters I/B/E/S.

(Reporting by Deepa Seetharaman; Additional reporting by Edwin Chan; Editing by Leslie Adler)