News of a potential sale was reported by The Wall Street Journal last month and the department store operator confirmed Thursday that it had agreed to acquire the company for $250 million in cash and plans to integrate it into Saks Off 5th, the off-price arm of Saks Fifth Avenue.
“With this transaction we are further accelerating both HBC’s all-channel offering and Gilt’s growth,” Jerry Storch, chief executive officer of HBC, stated, citing Gilt’s “loyal and devoted millennial following.” He continued, “Adding Gilt to our rapidly growing digital business is very exciting and we see tremendous potential to enhance our mobile and personalization strategies by leveraging Gilt’s advanced capabilities.”
Founded in 2007 by Alexis Maybank and Alexandra Wilkis Wilson, Gilt quickly gained a fan base among fashionistas eager to snap up limited-time deals on designer threads and the members-only start-up was valued at $1.1 billion in May 2011. But it has since fallen fast and hard, posting a 10 percent decline in third-quarter sales to around $125 million and an operating loss of $11 million.
“HBC and Saks Off 5th are the ideal home for Gilt and our members,” Michelle Peluso, chief executive officer of Gilt, said. “HBC understands our proposition and is committed to positioning our business for further success. Our members will find having a brick-and-mortar presence valuable and a positive addition to the Gilt experience.”
HBC said the transaction is expected to contribute about $500 million to the company’s consolidated fiscal 2016 sales and will contribute roughly $40 million of adjusted EBITDA by fiscal 2017.
In addition to integrating Gilt with Saks Off 5th locations, HBC will introduce a new return program at these stores for merchandise sold by the flash-sale site as well as in-store concept shops.
The transaction is expected to close in February.