Gilt Group bought by Hudson’s Bay: Ad Review imminent
Steve’s breakdown: Gilt Group has spent up to $30 million in advertising but we think there will be some changes. Some kind of review of advertising and ad budget are going to happen.
NEW YORK, NY & TORONTO, Canada: Leading department store operator Hudson’s Bay Company confirmed months of speculation and agreed to pay what appears to be a modest sum to acquire online luxury retailer Gilt Groupe.
Hudson’s Bay, which operates 470 department stores including Saks Fifth Avenue and the Off 5th discount format, said it agreed to pay $250 million for Gilt in a deal that will add $500 million to 2016, $40 million in adjusted operating profit by 2017 and countless synergies to leverage the combined companies’ infrastructure and customer databases.
Hudson’s Bay CEO Jerry Storch said the deal will accelerate the department store operators’ omnichannel offering and fuel Gilt’s growth. Gilt has more than nine million customers who registered to access the company’s online site focused on offering discounted luxury goods and Hudson’s Bay plans to leverage that popularity by integrating Gilt departments in its Saks Off 5th stores.
“We plan to continue to foster Gilt’s culture of innovation, which has helped create a strong brand with a loyal and devoted millennial following,” Storch said. “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.”
Some of the immediate growth opportunities the company envisions include simply growing Gilt’s underlying business but also revenue synergies from accepting Gilt returns at Saks Off 5th stores and growing Gilt’s membership by leveraging HBC’s customer base. Meanwhile, opportunities for revenue growth at Saks Off 5th include increased customer traffic to stores from Gilt customers making returns and sales to customers visiting Gilt concept shops inside Saks Off 5th locations. Opportunities for expense savings and operational efficiencies from combining the businesses include reduced shipping costs, increased purchasing power, and shared inventories across Gilt and Saks Off 5th, according to the company.
“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,” said Michelle Peluso, Gilt’s CEO. “We are excited for our future and confident that we have the right team in place to continue to innovate the shopping experience and grow Gilt.”