Gilt Groupe Plans New Round of Financing: CEODecember 28, 2010
by Nadia Damouni
Ryan said an initial public offering currently looks more likely. “Next summer I would start thinking about whether we want to put ourselves in a position in 2012,” Ryan said.
E-commerce has been the bright spot in the volatile world of retail this year, as high unemployment and a still-shaky economy reduce consumers’ desire to head to stores and shop.
Luxury online sites like Gilt Groupe have managed to keep their customers clicking due to their flash sales—sales that offer a for a limited time—that build on excitement and the perception of exclusivity.
Still, there are constraints to the e-commerce retail model. “Over time it certainly won’t be as viral,” Wedbush Morgan analyst Kerry Rice said. To remain sustainable, Rice said these companies need to invest more in the business.
For now, Gilt appears to be well ahead of its peers. Rue La La, its next competitor, is expected to generate revenue of $221 million in 2010, increasing to roughly $270 million for 2011, said Rice.
“Any competitors we have in the space like Rue La La or Haute Look are not as high-end as we are, but they are also smaller,” Ryan said.
Gilt’s luxury discount sales thrived during the downturn, and Ryan said it was his expectation that the business will do as well as the economy improves.
“It is a playbook out of Amazon in some ways from 10 years ago,” Ryan said. “The one thing we have done better than most players is expand our product line, and we will continue to do that as we see great opportunities out there.”