Gilt Groupe layoffs sign of flash-sale slump?

25 Jan, 2012

Luxury Daily reports on the shakeup this week at Gilt Groupe, specifically the firing of two top executives and ten percent of the company's overall workforce. The company also closed offices for Gilt City, its local flash-sales arm, in San Diego, Atlanta and Dallas among other cities. “I think one of the challenges for all flash Web sites is that they depend on discounting and, by nature, have lower margins than companies who sell full-price products,” Milton Pedraza, president of the Luxury Institute, New York, told Luxury Daily. “There is always a pressure on profitability." The company claims December 2011 was its most profitable month on record and the reorganization effort is meant to increase profitability moving into 2012. The effect of the layoffs on Gilt's travel flash-sales arm, Jetsetter, is unknown. Hotel Management sat down with Jetsetter in 2011 to discuss the value they offer to hoteliers with excess inventory. “We’re generating demand for a hotel, in a way the traditional space hasn’t been able to accomplish,” said Heather Leisman, VP of partner development at Jetsetter.