Gilt Groupe, the NYC-based online fashion retailer is close to being acquired by the owners of Sak’s Fifth Avenue and Lord & Taylor. The Canadian parent company of the department stores, Hudson’s Bay Co., is expected to pay about $250 million for Gilt according to Wall Street Journal sources.
That price tag is a long way from the $1.1 billion valuation Gilt Groupe had as recently as 2011. The company is being touted as a prime example of an overvalued ‘unicorn’ (privately held company worth more than $1 billion) that has faltered after an influx of VC money.
Nothing has been inked yet, but even if the Hudson’s Bay bid fails, a sale is expected early in 2016. Gilt has raised about $280 million in capital since its founding in 2007, including a $50 million round as recently as March.
Gilt exploded onto the scene in the late 2000’s with its popular flash sales. During the financial crisis, big brand retailers were looking for a place to unload their inventory at discount prices. As the economy recovered that trend slowed, there was less discounted inventory on the market and ever more online marketplaces to sell them.
In recent quarters other flash sale sites like Rue La La and Zulily have also struggled, as discount stores like TJMaxx and Nordstrom Rack have flourished. Gilt still has a huge online following of roughly 9 million users.
Hudson’s Bay Co. paid $2.9 billion for Sak’s in 2013 and earlier this year shelled out another €2.5 billion for German retailer Galeria Kaufhof.
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