The flash-sale site will combine with Hudson’s Bay’s Saks Off 5th unit to add online shopping options.

(Bloomberg)—Gilt Groupe Holdings Inc., a startup once valued at about $1 billion, agreed to be acquired by Hudson’s Bay Co. for $250 million in cash.

The business will be combined with Hudson’s Bay’s Saks Off 5th division, giving customers more online shopping options, according to a statement from the companies on Thursday. The deal is slated to close around Feb. 1.

Department-store chains are scrambling to add e-commerce capabilities at a time when bricks-and-mortar shopping is in decline. Though flash-sale services such as Gilt have lost favor in recent years, the business has more than 9 million members, who use the service to shop online for fashion, accessories and home decor. Hudson’s Bay, No. 97 in the Internet Retailer 2015 Top 500 Guide, plans to open Gilt concept shops at its Saks Off 5th stores, an attempt to create a so-called all-channel model. Hudson’s Bay had Internet Retailer-estimated 2014 web sales of $400.2 million.

Hudson’s Bay expects Gilt (No. 68) to add about $40 million in adjusted earnings before interest, taxes, depreciation and amortization by fiscal 2017. The buyer, which also owns Lord & Taylor in addition to its namesake line of department stores, plans to pay for the deal with cash on hand.

For Gilt, the deal represents a comedown from its original ambitions. The company had been envisioning an initial public offering and was often cited as a top New York technology startup. But the flash-sale market, which lets customers snap up discounted products for a limited time, became more crowded and many shoppers lost interest in the approach.


Gilt CEO Michelle Peluso said in an email to customers today that they would soon be able to return items ordered online to Saks Off 5th stores. Those stores also will soon have Gilt “concept shops,” similar to a styling room Gilt tested in New York City. She said the deal will enable Gilt to offer more and better merchandise, saying, “Bigger assortments and exciting new brands are on the way.”