Seed Stage Slaughter

More Layoffs in Fashion Flash Sales Space, This Time at Rue La La [UPDATED]

ruelala More Layoffs in Fashion Flash Sales Space, This Time at Rue La La [UPDATED]Earlier today, the Boston Business Journal broke the news that Rue La La, private shopping and flash sales site, was going to lay off nearly half of its 200-person staff and had already let go of 30 people today. Betabeat heard that across the country, local teams have closed their doors. Now the Boston Globe, has confirmation from the company that it is cutting 60 people from a staff of 550 people.

Rue La La, a Boston-based company founded in 2008, is operated by a parent company called Retail Convergence Inc. The Business Journal reported that Retail Convergence plans to close down SmartBargains.com, a separate discount site, and merge it into Rue La La. “They [Rue La La] certainly have a better brand than Smartbargains,” noted Fashism founder Brooke Mooreland when reached for comment.

The company told the Globe, that it plans on “outsourcing our sales force and consolidating SmartBargains.com into Rue La La…These moves unfortunately resulted in the elimination of some staff positions.”

Betabeat heard independently that Rue La La’s local deals will now go through Bloomspot, but that they are keeping Rue La La nationwide. According to Crunchbase, Bloomspot, “provides limited quantity exclusive offers for weekend getaways and exceptional local experiences.” However, the Globe reports that: “The company said it plans to devote more attention to its ‘core business’ and restructure its network of Rue Local sites in San Francisco, Miami, and Chicago, all of which were launched last August.”

Retail Convergence has a somewhat circuitous history. The company raised venture capital before being acquired by Pennsylvania-based GSI Commerce Inc. in 2009 for a deal valued at $350 million. Last March, when GSI was acquired by eBay,  Rue La La reportedly received $500 million in debt and equity financing as part of the deal, according to the Boston Business Journal. Retail Convergence was then spun out as a subsidiary with eBay retaining 30 percent ownership.

The Globe says Rue La La “had been a drag on the earnings of its previous parent company, GSI Commerce.” In a statement to the paper, Rue La La said, said it had experienced “dramatic growth with nearly $300 million in sales in 2011 and similar growth planned for 2012 and beyond.”

Rue La La’s staff actually includes the remnants of other fashion startups that suffered from seed stage slaughter. Back in August, we noted that when the fashion flash sales aggregator MyNines shuttered, its founder Apar Kothari was named Rue La La’s vice president, head of business development and strategic partnerships.

January has been a rough month for the flash sales sector. Earlier this week, Betabeat broke the story about impending layoffs at Gilt Groupe.

We have reached out to Rue La La and Ms. Kothari for comment and will update you when we hear back.

Follow Nitasha Tiku on Twitter or via RSS. ntiku@observer.com

Comments

  1. EraseGreed says:

    They make a 300 million dollar profit and lay off 65 of their workers without even giving them notice??? That’s beyond lousy

  2. Beth says:

    with one month’s severance only word has it…  Lousy handling of employees.