Rue La La acquires Gilt Groupe in a flash
Hudson’s Bay has agreed to sell its Gilt Groupe to its flash site rival, Rue La La.
The move is seen as part of Hudson’s Bay plan to rid itself of unprofitable businesses while it seeks to raise profits through the sale of real estate and a greater focus on driving sales at remaining units.
Hudson’s Bay, which acquired Gilt Groupe for $250 million, agreed to sell the business for $100 million. Gilt, which was once valued at more than $1 billion, according to a Wall Street Journal report, has seen its value drop as much of the enthusiasm tied to flash sales sites has faded over the years.
Back in 2010, dollar sales on flash sales sites rose 92 percent, but growth slowed to 21 percent in 2011, according to research published in 2012 by American Express Business Insights. In subsequent years, much of the shine has gone off the flash sales site business as consumer interest and the venture capital funds that followed it have waned.
While it may not have lived up to the expectations of Hudson’s Bay management team, Gilt still represents a sizable chunk of business. The combined company, which will operate under the Rue Gilt Groupe, will serve over 20 million customers. The Journal puts sales at the two companies at around $1 billion annually.
Rue La La has promised to “leverage an advanced technology platform that combines leading capabilities in mobile and personalization” to drive performance of the flash sale sites. Rue La La has taken a mobile-first approach in recent years, with more than 60 percent of its sales originating from smartphones and other devices, according to a press release announcing the deal.
“Having achieved record revenues and profits in 2017, Rue La La is poised to further strengthen its leadership position in fashion off-price e-commerce,” said Mark McWeeny, CEO of Rue La La, in a statement. “Through the acquisition of Gilt and our evolution into a multi-brand platform, we are equipped for an acceleration in growth, innovation and profitability.”
- Rue La La to Acquire Gilt – Rue La La/PRNewswire
- Gilt Groupe Sold to Rival Rue La La – The Wall Street Journal
- Flash Sale Sites Lead to Full-Price Purchases – RetailWire
DISCUSSION QUESTIONS: What do you see as the current state of the flash sales site business? Will the newly formed Rue Gilt Groupe be successful?