On Friday, Rue Gilt Groupe, an e-tailer that sells discount designer brand products, including jewelry, filed to go public.
The SEC filing argued that the market Rue Gilt Groupe targets has been “underserved” online.
“The off-price category has now grown to nearly a $100 billion industry, yet remains largely controlled by brick-and-mortar retailers,” said the filing.
“We don’t just produce a sale for our brand partners,” it added. “We produce a show.”
Like many e-tailers during COVID-19, Rue Gilt Groupe has shown rapid growth. For the year ended October 2, 2021, revenue increased 28.3% over the prior year to $702.5 million. It claims more than 1 million active buyers.
Still, the filing warned it has incurred “operating losses each year since our inception”—including a $15.9 million loss from 2019 and a $16.3 million loss in 2020. The company admitted that it “may not achieve or maintain profitability in the future.”
Handbags, accessories, and jewelry is currently the company’s largest segment, accounting for 31% of sales. Women’s accessories is second, comprising 28%.
Gilt Groupe was founded in 2007, and is generally credited with spurring the short-lived vogue for flash sales—which offered eye-popping deals for a limited time. (JCK could not find the term flash sales in the filing.)
While, in its heyday, Gilt Groupe was valued at more than $1 billion, Hudson’s Bay Co. purchased it for $250 million in 2016.
Rue La La was founded in 2008 with a business model similar to Gilt’s. Long owned by an e-commerce company, Rue La La merged with its longtime rival in 2018, after it was clear that Hudson’s Bay no longer wanted Gilt on its books. The next year, mall owner Simon Property Group purchased 50% of the combined company. With that investment, the company acquired Shop Premium Outlets, an online marketplace similar to Simon’s outlet malls.
Despite their similar business models, company executives have said that Gilt targets upscale, urban shoppers, while Rue La La is more mass-market. The prospectus said the two sites share less than 7% of total active buyers.
(Photo: iStock)
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