Feb. 10 (Bloomberg) -- Gilt Groupe Inc., an online retailer of discounted luxury goods, picked Goldman Sachs Group Inc. to manage its initial public offering, according to people with knowledge of the deal.
Timing for the IPO has still not been decided, said the people, who asked not to be identified because the announcement hasn’t been made public.
E-commerce IPOs have been rare in recent years as Amazon.com Inc. expanded its dominance by focusing on growth -- building warehouses and lowering prices -- while forgoing profit. Zulily Inc., which runs a shopping site targeted at moms, was an exception last year. After its share sale, Zulily is now valued at $4.76 billion, making it the third-biggest U.S. e-commerce company by market value, behind Amazon and EBay Inc.
Gilt, founded in 2007, was forced to cut divisions and eliminate jobs after competition emerged for its flash sale model, which involves offering limited-time deals at steep discounts. The company named former Citigroup Inc. marketing head Michelle Peluso as chief executive officer last year, replacing co-founder Kevin Ryan.
In an interview in September with Bloomberg Radio, Peluso said that an IPO is “a likely path for us but we’re not in a rush.”
Goldman Sachs is an investor in Gilt and was part of a $138 million financing round in 2011, valuing the company at about $1 billion, that included Japan’s Softbank Corp. and venture investors General Atlantic and Matrix Partners. The company has raised a total of at least $240 million.
In 2012, Gilt generated $550 million in revenue, excluding businesses it discontinued, up from $450 million the prior year. The company was expected to generate cash from operations by the end of last year, Peluso said in September.
Jennifer Miller, a spokeswoman for New York-based Gilt, declined to comment. A spokesman for Goldman Sachs declined to comment.
The U.S. e-commerce market is expected to climb 15 percent this year to $300.6 billion, according to researcher EMarketer Inc. Revenue at Seattle-based Amazon is projected to rise 21 percent to $90 billion, according to data compiled by Bloomberg.
Gilt’s current deals include a pair of Elizabeth & James womens’ sandals for $129, down from $198, and a $449 Hickey mens’ pinstripe sports coat, down from $895.
Some Gilt rivals have moved away from flash sales and others are stumbling. Fab.com Inc. stopped its flash technique last year, opting instead to let customers track departments and products they like, and has cut jobs. Rue La La and Lot18 laid off employees and scaled back. Totsy, a flash site aimed at moms, liquidated its assets last year.
Ventee-Privee.com, a French e-retailer that competes with Gilt, plans to more than quadruple revenue in the next decade by extending the flash model, founder Jacques-Antoine Granjon said this month.
Peluso was CEO of Sabre Corp.’s online flight reservations unit, Travelocity, which she helped modernize starting in 2003. In 2009, the year she joined the board of Gilt, she began working for Citigroup and became chief marketing and Internet officer, aiming to make banking technology more consumer-friendly.
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