Daily Daze

Layoffs at Gilt Groupe Complete: 90 Employees Let Go, Gilt City Closes Offices in Six Markets

gilt groupelayoffs1 e1327346171431 Layoffs at Gilt Groupe Complete: 90 Employees Let Go, Gilt City Closes Offices in Six MarketsGilt Groupe’s 900-some employees can rest easy, for now. In response to questions from Betabeat, the company confirmed this afternoon that the recent spate of layoffs is over. CEO Kevin Ryan initially estimated that about 50 people would be let go, however, the total number of layoffs across Gilt Groupe’s businesses “ended at 80-90.”

In a statement, the company said, “We don’t foresee additional layoffs at this time.”

Betabeat heard word Friday that part of the restructuring would involved shutting down certain markets for Gilt City, the company’s location-based deals service that offers discounts on luxury events and experiences. In the statement, Gilt Groupe confirmed that it will be closing its offices in six secondary cities “effective immediately,” namely San Diego, Houston, Philadelphia, Seattle, Dallas, and Atlanta. “We have not been as successful in smaller markets and the resources they require take away from growing our core business,” the company said.

Prior to this move, Gilt City operated in thirteen markets, so this represents a significant reduction. Going forward, Gilt Groupe said it will be “servicing those smaller markets through a centralized sales force.”

The company maintains, however, that in larger cities, Gilt City, which competes with other deals sites from Groupon to LivingSocial to Jetsetter (another Gilt property) has a market edge. “Regarding Gilt City, that business has developed a clear market position and terrific offerings in our core cities, with NY, LA, SF, Chicago, Boston, DC and Miami all showing growth over the last year. “

On Friday, sources also told Betabeat that several high-level staff members from Gilt City were let go, including the division’s president, chief revenue officer, and senior director of sales. In the statement, Gilt Groupe confirmed that Nate Richardson, Gilt City’s president, will soon be leaving be the company, although the company says it was of his own accord:

“This restructuring has accelerated some changes that were percolating on the management level. Nate Richardson has expressed his desire to return to the start up world, a place where he thrives.  He’ll continue to stay on through a transition phase before moving on.  Nate was initially brought to Gilt to build and launch Gilt Man which has gone on to become one of Gilt’s marquis businesses.  He then launched and expanded Gilt City which has grown significantly under his entrepreneurial direction.”

Betabeat was the first to report impending layoffs at Gilt Groupe. At the time, sources said John Auerbach, head of the mens site Park & Bond, had been let go. Mr. Ryan responded via AllThingsD that Mr. Auerbach was “still working there as of now.” However, today, he tells the site that Mr. Auerbach is indeed also leaving because he is, “better suited for running start-ups.”

The past few months have been a period of reckoning for flash sales sector. After laying off nearly half its staff, BuyWithMe, another daily deals site, was acquired by Gilt City along with 20 to 25 of its 190 employees. Earlier this month, Mr. Ryan told AllThingsD that after Gilt City was fully integrated with BuyWithMe, they probably wouldn’t need as many employees.  Like both BuyWithMe and Lot18, Gilt Groupe, which expects an IPO as soon as Q4 2012, raised significant venture capital before laying off employees. In May, Gilt Groupe raised a $138 million series E from Goldman Sachs, Draper Fisher Jurvetson, and others, at a rumored $1 billion valuation.

We will be updating this story as we learn more. Please email tips@betabeat.com.

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

Comments

  1. Anita Mann says:

    The bubble on private sales are about to pop! Layoffs at Rue La La now Gilt Groupe.

    Will Ideeli, Haute Look and the grand father of them all
    venteprivee.com entering the US November 2011 feel the heat?