Rue La La, under parent company Kynetic, has acquired Gilt Groupe from Hudson’s Bay Co. to create one large flash sales entity called Rue Gilt Groupe. After merging, the companies are slated to reach $1 billion in sales. The combined group will be the fourth largest player in the flash sales space, according to Rue La La CEO Mark McWeeny, next to QVC’s Zulily, Vente-Privee in Europe and Vipshop in China. The financial terms of the deal weren't disclosed. Hudson’s Bay bought Gilt in 2016 for $250 million — a significantly discounted price considering the $280 million the company had raised from investors. Founded in 2007, Gilt was once valued at $1 billion.
Total Retail's Take: The decline of the flash sales model created an opportunity for Rue La La to acquire Gilt at a discounted price, creating a stronger combined company. The two brands will operate independently, and will focus their efforts on the off-price channel, and less of a dependence on flash sales. Off-price retail, particularly brick-and-mortar brands (TJX, Ross Stores), has proven to be a strong performer in an otherwise challenged retail environment. The Rue Gilt Groupe is banking on the off-price momentum continuing online — particularly via mobile, which accounts for more than 60 percent of the combined companies’ sales.