Hudson's Bay Company announced Thursday that it has agreed to buy online retailer Gilt Groupe Holdings for $250 million (U.S.) cash in order to advance the company's off-price business through integration with Saks OFF 5TH stores.
Gilt has more than nine million members, including a devoted millennial following, according to HBC.
“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,” said Jerry Storch, chief executive officer of HBC, in a press release.
Headquartered on New York City's prestigious Park Avenue, Gilt was founded by Kevin Ryan in 2007 as an invitation-only site for women's clothing and accessories. It has since expanded into products for homes, babies and children and men.
HBC expects to fund the $250 million purchase price plus transaction costs using cash on hand. The acquisition is expected to add about $500 million (U.S.) to HBC's overall revenue this year, according to the Canadian Press.
About half of Gilt's revenue is generated by mobile shoppers.
“HBC and Saks OFF 5TH are the ideal home for Gilt and our members,” said Michelle Peluso, chief executive officer of Gilt. “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.”
Gilt returns will be accepted at Saks Off 5TH stores, increasing customer traffic. Gilt concept stores will be opened in Saks OFF 5TH locations. The move will allow the two companies to streamline shipping costs, increase purchasing power and share inventories, according to the press release.
The first Saks Fifth Avenue and Saks OFF 5TH stores are scheduled to open in Canada this year.
– With files from The Canadian Press