IPO Alert: Fashion retailer Rue Gilt set to go public. Here’s what to look for

While the e-commerce boom set off by coronavirus made things easier for most home-bound people, the pandemic-induced financial crunch remains a cause for concern for many. Not surprisingly, discount retailers like Rue Gilt Groupe, Inc., are witnessing strong sales.

For Nasdaq Listing

The New York-based company, a luxury off-price online retail platform, in a regulatory statement this week revealed plans to become a public entity through an initial public offering. It plans to list on the Nasdaq stock exchange under the symbol RGG. The offering will be led by Citigroup and Bank of America. Meanwhile, the management is yet to disclose the number of shares being offered and the offer price.

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Read management/analysts’ comments on quarterly reports

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Of late, the company has been benefitting from the market reopening and rebound in consumer spending. Rue Gilt operates as a link between fashion brands and modern shoppers. Founded in 2008 as Rue La La, the company assumed the present identity after the acquisition of lifestyle shopping website Gilt a few years ago.  

Its portfolio includes brands like Gilt, Gilt City, and Rue La La, sold in partnership with digital-shopping platform Shop Premium Outlets. Being an established online marketplace for a slew of recognized brands, the company enjoys considerable customer loyalty. Heavy discounts and the differentiated value proportion give it an edge over rivals.

Focus on Customers

The company has been effectively using its flash sales campaign to woo customers. The management sees big opportunities in off-price retail, an industry that remains largely controlled by brick-and-mortar retailers despite hitting a value of around $100 billion.

Rue Gilt claims an average net revenue retention rate of 83% and a cumulative gross merchandise value of $5 billion since inception. It offers more than 5,000 premium and luxury brands to a growing customer base. The membership model facilitates the collection of important user data that helps improve the overall customer experience and better the product mix.

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The focus on the management’s growth strategy is to accelerate customer acquisition — transitioning from the conservative marketing strategy by investing in modern marketing channels like social media and television. Also in the pipeline are strategic portfolio expansion and opportunistic acquisitions.

Challenges

As a public company, the main challenge facing Rue Gilt would be competition, which would demand prudent steps in its journey to become profitable. Also, pandemic-related uncertainties and supply chain issues might put pressure on the business.

In fiscal 2020, the company generated $571.9 million in revenues, which is up 5% from the prior year. Meanwhile, net loss widened to $16.3 million or $0.07 per share from $15.9 million or $0.09 per share in 2019.