Could Gilt Groupe Pull Off an IPO?

The company is showing signs of life, but a deal might have to wait

   

A few years ago, e-commerce firm Gilt Groupe looked like an ideal candidate for a hot public offering. The company pioneered a new category of e-commerce known as “flash sales,” which allowed people to buy deeply discounted luxury goods during short periods of time.

Gilt was an instant hint … but then, it helped that it launched in 2008, when there was a huge supply of excess goods because of the financial crisis and when more consumers were desperate for deals.

However, the momentum really started to fizzle out last year. So to get back on track, Gilt cut back on expenses, laid off workers and closed down various divisions. The company also brought on board new CEO Michelle Peluso, who was Citigroup’s (C) Global Consumer Chief Marketing and Internet Officer from 2009 to 2012, and was responsible for the digital experience of the company’s 100 million customer base. Before this, she served as an executive at Travelocity, which underwent a successful turnaround.

The big concern for Gilt is that the flash-sales business is a fad, and many companies in the space have already refocused their businesses, such as Fab.com.

But Peluso doesn’t believe this is the right move, and is actually doubling down on flash sales.

To make the business work, Peluso believes Gilt must do more than just provide juicy discounts. Instead, success will require a obsession with analytics. This means using Big Data to make more relevant pitches to users, which should boost demand. There’s also been a big push in mobile; currently, 40% of sales come from this traffic avenue.

The strategy has shown some promise, with Bloomberg reporting that “sales growth in the past three quarters is up 50 percent from the previous nine-month period.”

To keep up its growth, Gilt will need to get access to premium products. But an improving U.S. economy could translate into a lack of available inventory … so it really doesn’t matter how successful Gilt is with getting its users to buy more if it doesn’t have more to sell.

Gilt likely will have to wait around a year if it really wants to see some traction on an IPO. If it can keep up its growth rate — and somehow find creative ways to get quality inventory — then the company should attract the interest of public investors.

Easier said then done, of course. And only possible if flash sales are more than just a fad.

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO StrategiesAll About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, http://investorplace.com/ipo-playbook/could-gilt-groupe-pull-off-an-ipo/.

©2014 InvestorPlace Media, LLC

Comments are currently unavailable. Please check back soon.