Gilt Groupe Cuts Include 10 Percent of Employees and Two Executives

Gilt Groupe, a luxury e-commerce and flash sales site, has trimmed roughly 10 percent — as many as 90 — of its employees, including some of its management team.

Earlier this month, Gilt Groupe CEO Kevin Ryan downplayed rumors that the New York-based company was undergoing a massive restructuring.

He said that nearly all of Gilt Groupe’s 900 employees and business units would remain intact, despite reports that painted a fairly grim picture of the situation.

Today, Ryan confirmed that the final tally ended up being from 80 to 90 people, and that John Auerbach, who headed Park & Bond, its men’s full-priced apparel site, and Nathan Richardson, who ran Gilt City, would both be leaving, after a transition period.

All of the cuts are designed to get the company to cash flow positive by the second quarter, and profitable by the fourth quarter, Ryan said.

Additionally, Ryan said that Richardson and Auerbach, who was Gilt’s fifth employee, are leaving because both are better suited for running start-ups.

“I will be their No. 1 reference,” he said.

An internal memo announcing the departures is expected to be sent around later this afternoon.

On Friday, the cuts focused on Gilt City, the company’s daily deals site that, despite its high-end focus, was competing head to head with others, such as Groupon, LivingSocial and the many other clones in the market.

Ryan said there will be a lot of consolidation in the daily deals space going forward, but that in certain markets it remains a good business for the company, including New York, which is its most profitable division.

“I think you’ll end up with a smaller group of companies. There will be a couple of high-end players, like ourselves and Bloomspot, and then there will be a couple of verticals, like restaurants or kids, and that’s it,” he said.

As part of Friday’s cuts, the company confirmed that it will no longer have offices in Seattle, Dallas and Atlanta. Additional offices it gained through the acquisition of BuyWithMe, including San Diego, Houston and Philadelphia, will also close.

Customers in those markets will receive national deals, but only local deals that are sourced through a centralized sales team. Going forward, Gilt will have offices in New York, San Francisco, Los Angeles, Boston, Chicago, Miami and Washington, D.C.

Earlier this month, Ryan had said he had only expected to lay off about 50 staffers, much less than the rumored 170.

On Friday, New York Magazine reported that more than 100 people were laid off, naming both Richardson and Auerbach as departing executives. It also reported that staffers, who once received a fridge full of snacks, would no longer have a daily supply of fruit, yogurt, cheese and Pellegrino water.

Over the past year, the company expanded quickly beyond its roots as a flash sales site, adding Park & Bond, Gilt City and Gilt Taste, a high-end grocery site. It continues to be in about seven businesses.

Some of the areas that were also restructured were the newer sites, like Gilt Taste and Park & Bond, which Ryan said took more resources to get up and running than it took to run on a day-to-day basis.

Gilt, 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, Ryan added.


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