Gilt Groupe Inc. raised $138 million in new funding, valuing the online retailer at $1 billion as it scouts for acquisitions and readies a full-price men’s apparel site.
This story first appeared in the May 10, 2011 issue of WWD. Subscribe Today.
“There’ll be a lot more consolidation in this space in the next 12 months,” Kevin Ryan, founder and chief executive officer of Gilt, told WWD. “The large companies like ourselves have a lot of revenues and a lot of traffic, and it’s going to be hard for the smaller companies to compete.”
Buying an online leader in bridal sales, for example, would give Gilt a running start in the category with vendor relationships, a customer base and knowledgeable executives, Ryan said.
After three-and-a-half years, Gilt is still in a phase of frenetic growth and still losing money, though the ceo said the company is in the red because it is ramping up new businesses, including the men’s site and a gourmet food site. Gilt is also looking abroad. Japanese cell phone company Softbank Group provided $62.5 million of the new funding and agreed to buy a 50 percent stake in Gilt’s Japanese subsidiary.
“We have 125 open positions right now and I have 14 full-time recruiters who only hire,” Ryan said. Thirty of Gilt’s 670 employees are working on new businesses.
Revenues this year are expected to range from $400 million to $500 million — 20 percent of which will come from men’s apparel. Ryan said an initial public offering was in the offing, but not over the next 12 months.
The name of Gilt’s full-price men’s site will be unveiled next month, and Ryan said he’s ready for the well-heeled competition.
“If you go to Saks and Nordstrom [online], my guess is what you’ll see when you arrive there are two women in dresses,” he said. “The question is: Is that a men’s site or is that really a women’s site?”
Those companies have superior brand recognition and marketing muscle, but Ryan is unfazed.
“Our online male sales are three to four times bigger than Saks and five times bigger than Bloomingdale’s,” he said. “The question is: Who should be worried?”