Flash sale relative newcomer Rue La La has snapped up Gilt Groupe, an eCommerce site that specializes in designer goods at a deep discount.
According to The New York Post, the terms of the deal are not yet known.
Hudson Bay is Gilt’s parent company, and the sale is now the second time in 11 years the site has been sold to new ownership. The hope, when HBC first bought Gilt, was that it could be useful in boosting online sales. The reality, however, was that flash sites as a segment have cooled quite a bit since the acquisition, and HBC has, in the meantime, decided to focus more closely on the retail locations it controls — notably Lord & Taylor and Saks Fifth Avenue.
Rue La La is owned by by Philadelphia eCommerce tech company Kynetic, which also owns sports licensing firm Fanatics. While the specific terms are unknown, it is known that Rue La La will pay less than the $250 million HBC paid for the company in 2016, according to sources familiar with the deal.
“We have been trying to buy Gilt for years,” said Kynetic Founder Michael Rubin. “We have an identical business model but serve different customers.”
Colllectively, the two firms will have over 20 million registered customers. The firms will see their names change as well: It seems the new venture is to be called Rue Gilt Groupe. The goal is to grow to $1 billion in annual sales.
Rue La La is unique in its segment in that it has profitably been selling designer clothes, beauty products and home decorations for four years and has seen high single-digit growth in that time.
At one point during the heady days of flash sale sites, Gilt was valued at more than $1 billion.
“Those days are in the rear mirror for this sector,” retail consultant Craig Johnson noted.
Several years ago, Gilt’s sales had been pegged at about $500 million — then they slid.
“Where this wasn’t the right fit for Saks, it’s the perfect fit for Rue La La,” Rubin said.
Gilt is seen as more exclusive and higher end than its rival, but crowding in the marketplace — from firms like Fab, zulily and Ideel — all ate into its bottom line, before all exiting through acquisitions themselves.
“As part of the actions taken to strengthen the foundation of the company and position HBC for profitable growth, we have made the decision to divest Gilt,” HBC said in a statement. “These transactions will allow us to focus time and resources on growth drivers that will have the greatest impact on our results.”