Flash sales pioneer Vente-Privee trims U.S. ambition
PARIS (Reuters) - Vente-Privee, the French firm that pioneered online sales events, plans to slow down expansion in the United States to become profitable as soon as possible in the highly competitive market.
Vente-Privee, which sells luxury fashion, wine and music at steep discounts to its 18 million European members in "flash sales" that last three to five days, began operating in the U.S. in 2011 in a joint venture with American Express.
Launched in 2001, Vente-Privee has grown fast and is now one of Europe's biggest homegrown online retailers, with a presence in France, Germany, Spain, Italy, the UK, Austria, Belgium and the Netherlands, and 2012 sales of 1.3 billion euros (1.11 billion pounds), a year-on-year rise of 22 percent.
Founder and Chief Executive Jacques-Antoine Granjon told Reuters the U.S. market was challenging, as consumers there are used to deep discounts from a variety of players, ranging from flash-sale websites to factory outlets and discount chains.
"We will be more cautious with sales growth in order to be profitable more quickly," Granjon said.
"America has an enormous potential but we must keep our costs under control. It is going to take time, it is difficult. We will tone down our ambitions in terms of expansion pace," he said, without providing further details.
Vente-Privee achieved sales of $25 million euros in the U.S. last year, a small fraction of its European sales, and aims to double that figure this year. The U.S. unit should be profitable within two years.
Asked whether he had abandoned his initial goal to reach $500 million in sales within five years in the U.S, Granjon said: "Five years is a long way ahead".
For 2013, Vente-Privee, which generates 80 percent of its revenue in France, targets double-digit sales growth and hopes to have more than 20 million European members by year-end.
The group employs 1,800 people in Europe and 100 in the U.S. where it has 600,000 members.
In Europe, Vente-Privee has seen its model copied by rivals, such as Spain's Privalia, Germany's Brands4Friends and the UK's Brand Alley.
While Vente-Privee dominates Europe, it faces competition from flash-sales companies in the United States, from market leader Gilt Groupe, to Rue La La, HauteLook and Ideelia, as well as from e-commerce giants, including Amazon, which has its own flash-sales site MyHabit.com.
Granjon and the other founders own 80 percent of the group, since U.S. private equity fund Summit Partners took a 20 percent stake in 2007.
Vente-Privee, which has been profitable since 2004, has been the subject of speculation it would list shares on the market.
Granjon repeated that a listing was not on the agenda, nor does he consider a sale of the firm, which had cash of 200 million euros, no debt and a five percent net sales margin.
In recent years, Vente-Privee has branched out from its origins in clothing into wine and travel and music. It now offers CDs and concert tickets and even premieres albums. Last year, it had the exclusive launch of an album by Iggy Pop.
Vente-Privee also announced on Tuesday the acquisition of the 19th century Theatre de Paris for up to seven million euros as part of a plan to lure cash-strapped consumers to theatre plays and concerts with discounted tickets.
(Reporting by Dominique Vidalon; editing by Geert De Clercq and Louise Heavens)
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