Gilt Groupe CEO: Restructuring Rumors Overblown, IPO Still on Track
Gilt Groupe CEO Kevin Ryan is denying rumors that the luxury e-commerce company is undergoing a massive restructuring, and said nearly all of its 900 employees and business units will remain intact.
Ryan called AllThingsD this morning to clear the air after a report in BetaBeat painted a fairly grim picture of the situation.
BetaBeat reported this morning that as many as 170 employees would be laid off today; that Gilt Taste, the company’s high-end grocery site, was likely to be closed down; and that Jetsetter, its travel operations, was likely to be merged with Gilt City, its daily deal division.
On pretty much all accounts, Ryan declared not guilty.
“We are not closing down any businesses. We are not closing down Gilt Taste, and we aren’t merging Gilt City and Jetsetter,” he said.
Additionally, another new division, Park & Bond, which sells full-priced men’s clothing, is also doing well. “In its fifth month of business, Park & Bond did more revenue than any other business in its fifth month,” Ryan added.
The one grain of truth in all of it, he said, is that over the next couple of months, he expects to selectively trim staff by roughly 50 employees.
But for emphasis, he added, the company will still end up having more employees by the end of March than it does now.
“It’s pretty minimal in the scheme of having 900 employees,” he said. “Not only will we do that [have cutbacks], but we will continue to do that. What Gilt needs to be, and is doing, is to create a fantastic consumer experience while running an efficient company.”
He said the company achieved its goal of generating $500 million in June and now is setting its sights on transitioning the business from a money-losing organization to cash-flow break even this year.
He also said that Gilt Groupe, which raised $138 million in capital last May, is on track for an IPO, perhaps as early as the fourth quarter, but more likely in 2013.
“The timing feels about right, and we are on a steady progression,” said Ryan, who declined to give revenue estimates for this year because the company is in the sensitive lead-up to a public offering.
Ryan named two divisions that may see cuts over the next couple of months: Gilt Taste and Gilt City.
In October, Gilt City purchased BuyWithMe, and although it hired only 20-25 of the deal provider’s 190 employees, Ryan said they probably don’t need that many going forward now that the integration has been completed.
Additionally, he said there are some inefficiencies within Gilt Taste.
Ryan characterized the site as “doing great,” but said it will need fewer staffers now that it is up and running. At first, it needed to negotiate deals with dozens of vendors and shoot photos of the more than 1,000 products on the site.
Now that they’ve hit a baseline of items, they’ll probably add only a couple hundred new products a year, reducing the need for so much staff.
“There’s much less work to do there,” Ryan said. “With flash sales, you have to do that process every week, but in the full-priced business, there’s greater start-up costs. That’s part of the business.”
In particular, BetaBeat said Park & Bond President John Auerbach was likely to leave the company.
Ryan said there’s always the chance one of the top 15 executives could leave, whether it was their decision or the company’s, but that Auerbach is still working there as of now.