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The daily deals giant Groupon Inc. (NASDAQ:GRPN) has announced a “material weakness” it its financial controls. The company has said fourth quarter results were worse than previously stated because of higher refunds to merchants.
According to a regulatory filing, the revisions reduced revenue in the period by $14.3 million to $492.2 million. Groupon had reported $506.5 million last month.
Groupon said it has revised the results due to concerns from its auditor about accounting for customer refunds. According to a statement issued by Groupon, the changes stemmed from a shift in “deal mix and higher price point offers, which have higher refund rates.”
Groupon has struggled to maintain its financial statements since the company filed for an initial public offering in June. Two months after its IPO, the company renounced a controversial accounting method for operating income after a review by the Securities and Exchange Commission. After counting the total amount of its daily deal sales as revenue, Groupon restated 2010 results in September. According to analysts, the move feeds negative sentiment around their disclosure.
After Groupon revised its fourth quarter earning and sales, shares fell 6.4 percent to $17.20 in extended trading yesterday. Shares of Groupon ended the first quarter Friday with a 10.9 percentdecline.
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