Flash-sale site Rue La La is acquiring rival Gilt from department store chain Hudson’s Bay as it seeks to fortify its presence in the world of online discount luxury. The combined company expects to reach about $1 billion in sales with a total of 20 million customers.

WHO: Rue La La strives to be the most engaging off-price, online style destination connecting world-class brands with the next-generation shopper. Each day, Rue La La members discover the most desired men’s, women’s, and children’s apparel and accessories; beauty, home décor, and accents; and exclusive destinations and experiences. Rue La La’s engaging approach to retail has brought excitement to online shopping, creating a captivating e-commerce destination that strategically supports its brand partners and inspires its members daily. Rue La La was ranked #8 on Internet Retailer’s 2016 Mobile 500 list.

Gilt is an online shopping destination offering its members special access to the most inspiring merchandise and experiences, all at insider prices. Gilt opens a window every day to the exceptional as it continually searches the world for the most coveted brands and products, including fashion and accessories for women, men, and children; home décor; and unique activities in select cities and destinations.

WHY: The Rue Gilt Groupe portfolio will serve over 20 million members with a focus on young, affluent, fashion and brand-conscious consumers. Merchandising scale and efficiencies will benefit both members and brand partners.

IN THEIR OWN WORDS: “Having achieved record revenues and profits in 2017, Rue La La is poised to further strengthen its leadership position in fashion off-price e-commerce. Through the acquisition of Gilt and our evolution into a multi-brand platform, we are equipped for an acceleration in growth, innovation and profitability,” Mark McWeeny, CEO of Rue La La said in a statement. “Together with Gilt, Rue La La looks forward to increasing our presence and offering the attainable luxury and best-in-class experience that today’s customers demand.”

Michael Rubin, executive chairman at Rue La La, adds, “This transaction places the Rue Gilt Groupe in the premier tier of e-commerce growth companies. Our two distinct brands have large, highly engaged customer bases, cutting edge technology and mobile leadership. With enhanced scale and efficiency, we expect our growth trajectory to quickly enable us to surpass $1 billion in total sales.”

DETAILS:

• Rue La La is acquiring rival Gilt from department store chain Hudson’s Bay.
• According to WSJ people familiar with the deal said the price is well below $100 million.
• Both brands will continue to operate independently, retaining their unique identities and serving distinct customer segments.
• Rue La La intends to hire more than 150 associates to run the Gilt business in New York, Boston, and Kentucky, as well as other sites across the country.
• Rue La La and Gilt, operating under the newly formed Rue Gilt Groupe, will leverage an advanced technology platform that combines leading capabilities in mobile and personalization.
• Rue La La was founded by Ben Fischman in 2008 and acquired in 2011 for an undisclosed amount by Kynetic, a holding company that also owns Fanatics and ShopRunner.
• Gilt Groupe’s struggles are well documented. The brand launched in 2007, grew fast, and took on $280 million in venture capital funding. At one point the business was valued at $1 billion by investors. Growth didn’t happen as quickly as investors expected. In 2016, Hudson’s Bay Company acquired the business for $250 million, which is less than the amount raised from investors in its multiple funding rounds.
• At the time of the acquisition Hudson’s Bay touted the deal as a way to rev up its online engine, but it failed to deliver a big benefit.