Gilt Groupe, once the city’s hottest e-commerce startup, won’t be celebrating a true Black Friday.
Tech insiders say this is a make-or-break holiday shopping season for the struggling e-retailer, which specializes in fashion flash sales.
No matter how many sales Gilt rings up between now and Christmas, the five-year-old privately held company will still end the year in the red, sources said.
In fact, its losses are widening as its revenue growth slows dramatically, these sources added.
And with the growing pool of red ink, the company, with 5 million members, has seen its value fall by about 20 percent, according to a person familiar with the situation.
“After an auspicious start and hyper growth two years ago, Gilt has suddenly lost momentum and hit a wall,” said Sam Hamadeh, CEO of PrivCo, a provider of private-company financial intelligence. “This holiday season is a make-or-break one for Gilt.”
The company, headed bv CEO Kevin Ryan, one of the city’s tech elite, had been one of the only Big Apple startups to command a $1 billion valuation, when it last raised money in May 2011.
At that time, Gilt’s revenue was up 90 percent from 2010, topping $500 million in 2011.
To be sure, many tech firms have seen their valuations tumble — especially in the wake of Facebook’s botched initial public offering that smacked some new realities into the market.
The social network giant started trading at $38 a share on May 18 but has spent every day since late July under $25.
Gilt was not immune, and in secondary trading, shares of the company were selling for $21.50 post-Facebook IPO, down from $26 a few months prior, according to Hamadeh, who tracked the stock on private exchanges.
Gilt is losing money, and revenue growth this year will slow down to 15.5 percent, hitting $580 million for 2012, sources said, despite the steep markdowns it featured.
For example, Gilt was selling this week a $900 Badgley Mischka ostrich feather trim coat for $499.
But the company is forced to spend heavily to attract buyers. Hamadeh estimated that the Gilt forks out $100 million for marketing alone, contributing to a yearly loss of $45 million.
Gilt’s Ryan is reportedly on his way out the door in a transition that the company has said was always the plan. A CEO search is ongoing.
The company did not return a request for comment.
Gilt had been on course to go public, likely next year, but industry watchers say that future is in doubt without a turnaround that hinges on this year’s holiday sales.