Gilt to be profitable this year, eyes IPO in 2013
SAN FRANCISCO (Reuters) - Gilt Groupe will turn a profit for the first time in coming months, helping the flash sales website prepare for a possible initial public offering in 2013, President Andy Page said on Thursday.
The company, founded by tech entrepreneur Kevin Ryan, will be profitable in the fourth quarter. It also has a chance of being in the black in the typically slow first quarter and is confident of a profit in the second quarter of next year, he said.
To get there, Gilt is shutting some businesses and streamlining others after an aggressive expansion into new categories in previous years.
On Thursday, Gilt said it is closing Park & Bond, a full-price luxury men's apparel business and folding it into Gilt MAN, the company's main men's apparel flash sales business.
Gilt Taste, the company's food business, will be slimmed down and Taste employees will become part of the company's home goods operation.
"It's important to show the business is profitable," said Page. "We're trying to address that so we have the opportunity to go public. The objective is to work towards that in 2013."
The changes announced on Thursday resulted in just four job losses because most affected employees were moved to other parts of Gilt Groupe, which has a total work force of roughly 1,100, Page noted.
Flash-sales websites offer steeply discounted products for a limited time. Gilt, which started in 2007, is the largest flash sales business in the United States. Others include Rue La La, HauteLook, owned by Nordstrom Inc (JWN.N) and Ideeli. Amazon.com Inc (AMZN.O) has its own flash-sales site called MYHABIT.
Gilt's Park & Bond was a departure for the company because it sold full-price apparel and did not limit the length of time items were put up for sale.
When Park & Bond discounted products from time to time, it confused some customers who were used to seeing discounted items from Gilt MAN, the company's flash sales channel for men, Page said.
"We made a difficult but important strategic decision to focus on a single shopping destination and experience for our customers," he said.
Park & Bond generated about $10 million in revenue since it started about a year ago.
"By start-up standards that is very successful," Page said.
But Gilt is aiming for the higher standards of a potentially public company now, he added.
(Editing by Andre Grenon)