When Gilt Groupe emerged as a deep-discount online clothing and furniture retailer in 2007, investors had faith that it would be a unicorn in the emerging ecommerce sector. Since its launch, the company has raised $300 million, including a $138 million funding round in 2011 that gave the company a $1 billion valuation.
While it was expected to IPO at some point, Gilt struggled to reach profitability and, according to a detailed report from Business Insider, overextended itself and lost its focus as a deep-discount retailer. Now that the hype is gone, Hudson’s Bay Company — which is headquartered in Toronto, but owned by New York-based private equity firm NRDC partners — has acquired Gilt for $250 million in cash.
HBC, which also owns Saks Fifth Avenue, said that the move reflects HBC’s desire to “advance its all-channel model”. The acquisition may help the ailing startup, as HBC plans to integrate Gilt into its Saks Off 5th chain, a discount version of the luxury Saks Fifth Avenue department stores. HBC expects to introduce a new return program at Saks Off 5th locations for Gilt merchandise, and plans to create Gilt concept shops at Saks Off 5th stores.
“We plan to continue to foster Gilt’s culture of innovation, which has helped create a strong brand with a loyal and devoted millennial following,” said Jerry Storch, CEO of HBC. Gilt currently has 9 million members. “Adding Gilt to our rapidly growing digital business is very exciting and we see tremendous potential to enhance our mobile and personalization strategies by leveraging Gilt’s advanced capabilities. We look forward to welcoming the Gilt team to HBC and to benefitting from the complementary nature of our businesses.”
HBC expects that the acquisition will contribute $500 million to its fiscal 2016 sales. “HBC and Saks off 5th are the ideal home for Gilt and our members,” said Michelle Peluso, CEO of Gilt. “HBC understands our proposition and is committed to positioning our business for further success. Our members will find having a brick and mortar presence valuable and a positive addition to the Gilt experience. We are excited for our future and confident that we have the right team in place to continue to innovate the shopping experience and grow Gilt.”
