Breaking: Rue La La acquires Gilt Groupe

Today, Rue La La acquires Gilt, creating the newly formed Rue Gilt Groupe. Both are flash sale e-commerce sites that sell designer goods for discount prices. According to a statement released by Rue La La, the two brands will continue to exist separately, since they have distinct customers. However, there will be consolidation on the back end to transform Rue La La into a multi-brand platform. For instance, the two brands will share mobile and personalization technology.

Gilt Groupe’s struggles in the past have been well documented. The brand, which launched in 2007, grew quickly and took on $280 million in venture capital funding. At one time, it was valued by investors at $1 billion. But it wasn’t able to grow as quickly was investors expected. In 2006, it was acquired by Hudson’s Bay Company for $250 million, less than the amount that it raised from investors in its multiple funding rounds.

Rue La La, which was founded by Ben Fischman in 2008, was acquired in 2011 for an undisclosed amount by Kynetic, a holding company that also owns Fanatics and ShopRunner. It also partnered with eBay on a new program called “Rue La La on eBay” which involved 8 sales per week, each lasting 48 hours, designed to drive Rue La La customers to eBay.

Together, the Rue Gilt Groupe portfolio will reach 20 million members, according to the statement. Michael Rubin, the executive chairman of Rue La La, says that he expects the growth trajectory of the merged brands to surpass $1 billion in total sales.