Saks Fifth Avenue owner Hudson's Bay Company has entered into a definitive agreement to acquire luxury deal site Gilt Group Holdings Inc., for $250 million, as traditional retailers are making a push to enter the online scene. As a result of the purchase, Hudson's Bay will combine Gilt with another one of its brands: Saks Off 5th, reported Fortune. Gilt concept shops will open at Saks Off 5th locations and Gilt shoppers will be able to return products purchased online at Gilt at Saks Off 5th.
With these plans in mind, HBC expects Gilt to be complementary to its existing business and contribute $500 million to revenue by fiscal 2016, and approximately $40 million of adjusted EBITDA by fiscal 2017, according to Business Wire.
"With this transaction we are further accelerating both HBC's all-channel offering and Gilt's growth. 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," HBC CEO Jerry Storch stated. "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. We look forward to welcoming the Gilt team to HBC and to benefiting from the complementary nature of our businesses."
Gilt CEO Michelle Peluso mirrored Storch's enthusiasm saying, "HBC and Saks OFF 5TH are the ideal home for Gilt and our members. 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. 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."
News of the deal comes as rumors about a potential merger emerged in December and as popularity of flash sites, an e-commerce business model in which a website offers a single product for sale for a 24 to 36 hour period, decline. Despite that, Storch believes Gilt would thrive under the HBC banner.
"We are a huge believer of an all-channel retail model," said Storch, according to ABC News. "Gilt is a very cool brand. This opens up a whole new world for Hudson Bay."
The deal is expected to close Feb. 1, 2016, and will be subject to customary closing conditions and Gilt shareholder approval.
