The RealReal Reports More Losses During Pandemic
The RealReal’s struggle for footing during the pandemic continued in its fourth quarter, though the luxury resale company pointed to growth in gross merchandise value.
In its aftermarket earnings release on Monday, the luxury resale business reported a net loss of $53 million for the fourth quarter of 2020. For the three months ending on Dec. 31, its total revenues were $84.6 million, a 10 percent decrease from the previous year. The company noted also that it incurred some $1.6 million in expenses related to COVID-19.
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But the company highlighted positive developments, including a 6 percent increase in GMV in December, and a 12 percent increase in active buyers last year, when there were nearly 648,900 active buyers, the company’s chief executive officer Julie Wainwright said in the company’s earnings release.
“We exited 2020 with our marketplace back to GMV growth, supply momentum increasing and widespread vaccine distribution hopefully around the corner,” Wainwright’s statement said. “Growth is a powerful driver of profitability as it enables us to realize efficiencies in our operations, leverage our fixed expenses, and negotiate better rates with our service providers. We remain focused on executing our growth recovery plans and have accelerated the time line for opening our new Arizona authentication center to support our next phase of growth. We will continue building on the strong momentum of the past several months to position us to profitably capitalize on the large luxury resale opportunity ahead.”
The retailer has said it has adapted during the pandemic, shifting to online consignment appointments and highlighting what it has said is a strong interest of late in the circular economy.
The company has also sought to mark its physical presence with stores in major cities including Los Angeles, Chicago, New York, San Francisco and others. The company has a dozen consignment offices, including several in its retail locations, where it has staff who make free valuations, according to the company.
The company also offers in-home pickup and drop-off services, it said. The company affirmed its physical presence, saying it plans to open some 10 neighborhood stores by the end of the second quarter.
“In December, approximately 30 percent of the company’s new consignors came from its retail locations,” the retailer said in its report. “The RealReal plans to open approximately 10 neighborhood stores by the end of [the second quarter] to deeply engage with the company’s most valuable customers and significantly unlock supply.
“In an earnings call with analysts Monday, Wainwright reiterated the company’s optimism over its GMV growth in December, saying it offered evidence of recovery from the early days of the pandemic.
She said also the company expects growth in apparel spending by consumers as lockdowns ease. She touted the company’s plans to open 10 neighborhood stores, pointing to the shifts in the commercial real estate market during the pandemic.
“The rents in the neighborhoods have dropped precipitously and the willingness of landlords to do shorter-term leases, [is] also critical to our decision making,” she said.
The company’s chief financial officer Matt Gustke said stores would be sized roughly in the range of between 2,000 square feet and 4,000 square feet, and that the lease terms have durations of roughly two to three years.
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