Wednesday, 26 February 2020

The RealReal sees revenues soar, announces opening of San Francisco store




Digital-first luxury consignment marketplace The RealReal reported a 57% increase in fourth-quarter revenues on Tuesday and announced the upcoming opening of a brick-and-mortar store in its hometown, San Francisco, as well as plans for a further location in Chicago.

For the fourth quarter ended December 31, 2019, the company’s revenue totaled $97.3 million, up from $62.09 million in the prior-year period.

$80.7 million of this total was contributed by The RealReal’s consignment and service business, up from $55.1 million in the same period in the previous year, while the company’s direct revenue came to $16.6 million, up from $7.0 million. The RealReal also managed to trim its net loss in the quarter, cutting it down to $21.4 million, or $0.25 per share, compared to a net loss of $22.2 million, or $3.00 per share, in the previous year’s Q4.

For the full fiscal year 2019, the company’s total revenue was $318.0 million, an increase of 53% from $207.4 million in 2018. Consignment and service revenue came to $267.4 million, up from $184.0 million, while direct revenue was $50.6 million, up from $23.4 million.

Annual net loss at the company was $96.7 million, or $2.11 per share, swelling from a loss of $75.8 million, or $10.12 per share, in the prior year.

“In 2019, we surpassed $1 billion in GMV. We also made significant progress on our path to profitability while still making investments to capitalize on the massive opportunity in front of us,” said The RealReal founder and CEO Julie Wainwright in a release. “In 2020, we will continue to invest in growth while driving meaningful operating leverage as we continue to revolutionize luxury resale and deliver value to our consignors and our buyers.”

Looking forward, The RealReal expects to report revenues of between $291 million and $295 million in the first quarter of 2020, reflecting growth in the range of 30% to 32%. For the full fiscal year 2020, the company predicts revenues to be between $1.315 billion and $1.345 billion, representing growth in the range of 30% to 33%.

According to another announcement from the company, its new San Francisco location, an 8,000-square-foot store spread over two floors, is expected to open at 253 Post Street on Union Square in March. The RealReal posted a sketch of the store on its Instagram account on Wednesday, telling its followers that “there’s so much to get excited about.”

The company’s Chicago location, which will also feature two floors, is scheduled to open this summer. At 12,000 square feet, the store will be The RealReal’s largest brick-and-mortar location to date, sneaking past the company’s West Hollywood store, which has held the title until now.

Both of the upcoming locations will feature cafes and consignment offices, and will offer customers valuation services.

The RealReal’s brick-and-mortar network currently includes three retail stores spread over New York and Los Angeles, as well as nine luxury consignment offices, three of which are housed in the aforementioned stores.

With the second-hand fashion market expected to be worth $51 billion within the next five years, The RealReal’s biggest competition as it looks to claim its piece of the resale pie comes from platforms such as Poshmark and ThredUp.

While The RealReal has been developing its brick-and-mortar network since 2017, ThredUp has been busy securing partnerships for pop-ups and resale exchanges with retailers including Nordstrom and Gap. Poshmark, on the other hand, is yet to make a move into physical retail.

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