With deal-of-the-day sites like Groupon and LivingSocial generating reams of press coverage every day, the flash sale fashion industry is piquing the interest of private equity investors and major retailers around the world. Nordstrom bought out HauteLook for $270 million last week in a deal that was worth about 2 times the company’s revenue, according to Business Insider. Now, Gilt Groupe’s raising $80-$100 million from private investors in a deal that values the company around $1 billion.
Is Gilt Groupe readying for an IPO? Possibly. “The suddenly-rejuvenated IPO market … offers another potential attractive exit for Gilt Groupe’s investors,” writes Henry Blodget at Business Insider.
Gilt Groupe operates in an interesting niche somewhere between Groupon and discount clothing outlets like T.J. Maxx and Marshall’s. The company buys overstock clothing from retailers, then offers 36-hour flash sales to the site’s email subscribers. Most sales start at noon EST and offer a wide range of luxury products – from home furnishing to clothing and vacation packages.
Gilt Groupe’s not profitable yet, but the company’s revenues are growing quickly. After booking sales of $270 million last fiscal year, the company expects revenues to nearly double to $500 million this fiscal year, Business Insider reports.
Still, the competition is fierce. Sites like Groupon might have just enough cross-over appeal to eat into Gilt Groupe’s subscriber list. We can only look at so many email sales a day, after all. And at least five copycat sites that more closely duplicate Gilt Groupe’s model have cropped up in recent years.
An IPO might help Gilt Groupe position itself as an industry leader in the U.S., but if they do plan to go public, they’d better do it quickly. Otherwise, someone else likely will, and the public appetite for trendy new Web sites could start to wane after what’s promising to be a particularly active year for tech IPOs.
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