Gilt Groupe Cuts 45 Jobs Amid A Quest For Profit, CMO And International Head Exit

Some downsizing is on the cards for Gilt Groupe, the fashion flash-sales site that has been valued at $1.1 billion. TechCrunch has learned that the company is cutting 45 jobs as it tries to turn profitable by next year. Among those leaving the company are CMO Clay Cowan and head of international business Marshall Porter, with the roles disappearing with them.

TechCrunch first heard of the layoffs from two sources before confirming the details with a company spokesperson:

“While it is always difficult to lose talented people, we are confident the changes we made today position Gilt to be a profitable business in 2016,” Jennifer Miller, SVP of corporate communications, said in a statement provided to TechCrunch.

From what we understand, Gilt currently has annual revenues of around $600 million. The company actually described itself as EBITDA profitable as far back as 2012, but it has yet to ever turn cash flow positive in its eight years of operations. “It’s hit many milestones, but profitability is not one of them,” one observer said.

As a company, you could say Gilt has seen better days. Tapping into people’s double love of fashion and chasing down a good deal online, the New York-based startup was once the very embodiment of its name: the shiny golden child of e-commerce, inspiring clones from envious onlookers also wanting to get in on the flash sales landgrab.

During Gilt’s rise, there was talk of the company looking to go public in 2013 (even as it laid people off). Then the 2013 date seemed then to slip to 2014, before quietly disappearing altogether. Instead, Gilt raised $50 million in February 2015 on an undisclosed valuation and cut jobs. (To date, Gilt has raised $286 million, with investors including DFJ, General Atlantic, Matrix Partners and Softbank.)

These days, Gilt’s numbers speak of its challenges to keep up traffic and general buzz. SimilarWeb puts Gilt at number 46 among all clothing shopping sites, and at 1,162 (and declining) among sites in its main U.S. market.

“Traffic has been dwindling since last year,” says one source, who characterizes the layoffs as “streamlining headcount in order to make up for the loss in traffic and revenue.”

As for those layoffs, neither the CMO nor international head will get replaced. Part of the marketing duties will pass to Gilt’s CIO, who will bring a tech perspective to the area with a focus on what Gilt describes as “demand marketing.”

Meanwhile, international operations, which make up 20% of the company’s revenue, will continue to run but will no longer report to an SVP. The company’s Japan operations, run by interim Japan CEO Jonathan Venuto, will continue as before. (Previous CEO of Japan Joanna Dubin recently departed.)

Oksana Voronenko is being promoted to senior director of international and she will report to Steven Schneider, who will oversee International in addition to being president of daily deals site Gilt City and other business development. He reports to Tracey Weber, Gilt’s president, who reports to CEO Michelle Peluso.

Overall, the cuts are spread throughout the organization and include 35 full-time roles and 10 temp roles, or just under 5% of staff.

Gilt today focuses on fashion for women, men and children, as well as home goods and daily deals by way of Gilt City. There are no plans to cut any of these categories.

Gilt’s moves follow two ongoing stories in the world of tech.

First, they point to hurdles in the wider world of e-commerce, where a number of startups — even those that have vaulted into the so-called “unicorn club” with billion-dollar-plus valuations — have struggled to achieve viable economies of scale and margin in the face of larger competition from the likes of Amazon and eBay.

Other casualties in the space have included companies like Fab.com, which downsized and saw its European operations pivot into Hem, a vertically-integrated home product design and sales, while the U.S. Fab.com operation was sold in a firesale to PCH. And Zulily, which sailed through a $9 billion IPO and was once seen as a potential Amazon rival, saw its stock tank and was eventually acquired by Liberty Interactive’s QVC for $2.4 billion (a deal that closed just last week).

The struggle for scale, even for popular sites, is an interesting issue, when you consider newer e-commerce sites like Jet.com, which just today announced that it would be scrapping its $50 membership fee — a key part of its business model — in order to try to broaden the site’s appeal.

Gilt’s cuts and belt tightening also bring to mind the ongoing debate over whether or not we are in a tech bubble blown up by overvaluations and about to burst. If not a crash, there could at least be a correction underway. Among other moves, in recent months, Evernote laid off 47 people and mutual funds that invest in Dropbox marked down their holdings by 20%.

Updated with details of cuts in international operations, and change of CEO in Japan.