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Gilt is in serious talks to be acquired by Hudson’s Bay Company, the New York Times reports. Times sources say that the owner of Saks Fifth Avenue and Lord & Taylor could purchase the flash sale site for about $250 million, far less than Gilt's billion dollar valuation more than three years ago.
Sources also indicate that Hudson’s Bay wants to combine Gilt with its Saks Off Fifth outlet store chain. The department store owners are reportedly also attracted to Gilt's mobile sales prowess, which is an area Hudson’s Bay is looking to improve.
In October, Gilt laid off 45 employees as it sought to achieve its goal to become a profitable business in 2016. Now, "Gilt Groupe is likely in its last days or months as a standalone company" Re/code's Jason Del Rey writes. He analyzed the reasons why Gilt has found itself in this predicament, beyond Gilt's category expansions that didn't work out:
But the flip side of the story has always been more troublesome for Gilt: The realization that the flash-sale business is just not sustainable for a massive, standalone company. One reason is because as the economy has strengthened, fashion brands have typically had less inventory to unload. And when they do have more inventory to sell, there is now a much wider variety of sites and stores through which brands can distribute. Plus, Gilt gets more than a third of its revenue through Gmail email campaigns, and that method continues to be challenged because of how Google filters marketing messages out of the main inbox.
A deal betweeen Gilt and Hudson's Bay could be announced next year, but Gilt is also reportedly talking to a few other potential buyers. Both Hudson's Bay Company and Gilt declined to comment to NYT.