Exclusive: Gilt Groupe to Shutter Park & Bond, Cut Back on Groceries
Gilt Groupe, the luxury e-commerce and flash sales site, is announcing a restructuring today that will cut back on some of its unprofitable businesses as it prepares to file for a public offering sometime next year.
As part of the restructuring, said Gilt’s President Andy Page, it is eliminating the company’s full-priced men’s apparel site, Park & Bond, and is cutting back on Gilt Taste, which sells high-end food and wine. In addition, he said, Gilt is promoting Jyothi Rao to EVP of Fashion and Jason Goldberger to EVP of Home, Taste, Baby & Kids, and Business Development.
Today’s moves mark the second time this year that the company has tweaked its operations in order to achieve profitability. In January, Gilt Groupe trimmed roughly 10 percent — as many as 90 — of its employees, including some of its management team.
This time, fewer than five employees are expected to be impacted by the changes.
Park & Bond will be merged with the company’s original Gilt Man business. The transition will take place after the holidays, and it is unclear whether the Park & Bond brand will continue in any capacity.
Page said there continues to be a need for a higher-end men’s apparel site, as they originally thought, but Gilt customers arrive expecting discounts. “Customers felt that by having two separate sites to purchase from, it was confusing,” he said. “We are trying to streamline our offerings overall.”
Another unprofitable division that did not get the kind of growth that was anticipated was Gilt Taste, a high-end grocery where you could buy products usually available only to chefs. As part of the experience, Ruth Reichl, the former editor-in-chief of Gourmet magazine, was signed on as the editorial adviser.
Page said the Taste tab will continue to exist on the site, but that the offerings will focus on seasonality and holidays, as well as wine and champagne. Additionally, the editorial component will be cut back. Page said editorial content works well for Jetsetter, the company’s travel division, but it did not lead to more sales on Taste. Reichl continues to be a consultant.
In January, the changes were mostly focused on getting Gilt City, the company’s daily deals business, profitable — a goal it has achieved. In fact, Page says, the business is doing really well, reporting 50 percent year-over-year revenue growth. This time around, the changes are focused on getting the entire company to profitability. Overall, he says, Gilt Groupe will be profitable in the final three months of 2012, and then again in the second quarter of 2013. The first quarter, however, is seasonally slow.
Despite some of the companies ups and downs, which have been magnified by the pace at which it rolled out new products, he said it is still on track to become profitable by its fifth anniversary, this December — which is much faster than most other e-commerce companies historically.
Once that is achieved, and if the public markets continue to be favorable, he said they will seek an IPO in 2013.
“Gilt Groupe has had periods of profitability,” he said. “We are looking for sustainable profitability, and we will have achieved that with this announcement. We believe we will be profitable going forward,” he said.