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Hudson’s Bay Company to acquire Gilt Groupe for $250m

Published 08 January 2016

Department store chain Hudson's Bay Company is acquiring Gilt Groupe for $250m cash consideration.

The companies have entered into a definitive agreement for the acquisition, which is subject to customary conditions and regulatory approvals.

The deal reflects HBC's continued focus on expanding its all-channel model while also augmenting growth process in the off-price business with the integration of Gilt with Saks OFF 5TH locations.

Glit is an online retailer that offers customers fashion merchandise with members gaining special access to the merchandise and experiences. The platform has over nine million members and around half of its orders.

HBC CEO Jerry Storch said: "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. 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 benefitting from the complementary nature of our businesses."

Gilt CEO Michelle Peluso said: "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."

The deal is expected to add around $500m to HBC's consolidated sales for fiscal 2016 and complement HBC's business. HBC also plans to capitalize on Gilt's mobile and personalization capabilities for the growth of its digital business across its existing units.

The integration of Gilt with SAKS OFF 5TH locations includes a new return policy at Saks OFF 5TH locations for Gilt merchandise after the closure of the transaction. HBC further expects to benefit from this integration and hopes to create Gilt concept shops at SAKS OFF 5TH stores in order to develop all-channel model for Gilt.

With this acquisition, HBC expects Gilt to contribute around $40m to its adjusted EBDITA by fiscal 2017, through revenue and other cost driving factors.

HBC is planning to fund the acquisition using cash on hand. The deal is expected to close on 1 February 2016.