Gilt Groupe considers going public

Gilt Groupe, the parent of online fashion designer sale website Gilt, is expected to go public in 2012. The company, which sells discounted luxury fashion brands online via 'flash' sales, would hope to be generating $1bn in annual sales.

“I think it’s entirely possible that in 2013, depending on the markets and depending on how things are going, that we would look to go public,” Kevin Ryan, chief executive of New York-based Gilt, told the FT.

Market turmoil has forced many companies to delay their initial public offerings this year, but Mr Ryan says this has not affected Gilt’s timetable for a float.

Gilt and rival sites have attracted mainly female customers with steep discounts offered for a limited time and advertised with urgent emails. They are among the fastest-growing segments of online retail, which is itself expanding faster than traditional retail amid economic malaise in the US and Europe.

“We are certainly plenty big enough to go public. The question is, is it the right time, do you want to spend the time on that?” said Mr Ryan. “We’d look at the process in 2012.”

However, an IPO is unlikely in the next nine months, he added, as no meetings with advisers have yet been held, with a late-2012 debut at “the earliest”.

The hype around private sale sites – generated in the past three years by operators and customers as well as internet fashion sites – still exceeds their ability to generate profits as they invest to acquire more customers, according to independent retail analysts.

In addition to heavily discounted fashion, Gilt offers holidays and, with the recent acquisition of BuyWithMe, Groupon-style daily deals. In May, it raised $138m from investors including Goldman Sachs and Softbank of Japan, valuing the four-year-old company at $1bn.

Mr Ryan expects Gilt’s annualised turnover will be close to $1bn after posting gross sales of $500m in its financial year to June. “In the fourth quarter next year, which is the best quarter, we’ll be getting close to that run rate,” he said. Although some of its businesses are profitable, the company – which has almost 1,000 employees – does not comment on overall profitability.

Many of Gilt’s clothes failed to sell at traditional bricks-and-mortar stores. For luxury brand owners, flash sales sites provide a more glamorous means of shifting them than off-price retailers such as TJ Maxx or its European sibling TK Maxx.

Image: Gilt