Merchant Innovation

No IPO In Gilt’s Immediate Future

To go public or not to go public? That has been the question for discount fashion apparel company Gilt Groupe for the past two years.

Though widely forecasted to be heading for a late 2014 IPO, the process has been delayed due to financial concerns. But Gilt got some extra time to decide what to do after the fashion e-tailer raised an additional $50 million. The company known for offering discount fashion using “flash sales” raised the funds in a round led by current investor General Atlantic, but as far as using the funds to move toward an IPO, Gilt will continue to wait for what it deems to be the right conditions, though Goldman Sachs remains hired by the company when such an event occurs.

"What we’ve always said is [an IPO is] likely at some point,” Gilt spokeswoman Jennifer Miller told re/code, “but two things need to happen: We need to show consistent growth and profitability and market conditions have to be right."

The first part of Miller’s comments is what the company is still hung up about. The seven year-old company has not been consistently profitable and quarter-to-quarter growth remains inconsistent, according to sources close to Gilt. Despite progress under current CEO Michelle Peluso, there is not enough confidence within management that the company can launch successfully given its existing financial state.

As for favorable market conditions, fellow “flash sale” fashion retailer Zulily tested the waters back in 2013, and saw its market value plunge 64 percent in the past year. The concern, echoed by re/code writer Jason del Ray, would be that Gilt would be approached by investors in the same manner as Zulily, despite differences in customer base and structure.

Even without an IPO, Gilt has now raised over $300 million since 2007. It is following the longer road to an IPO that has become common among startups since 2000, where the focus is on securing more funding and being sure of the market’s readiness for the company. The new investments here will be put toward increased marketing as well as international expansion to strengthen the brand.


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