Revolve Readies for Post-COVID-19 Days
Revolve Group Inc. is ready for the party to start back up.
The tech-savvy e-commerce player, which targets Millennial and Gen Z consumers ready to celebrate just about anything, managed to post big profit gains and just small sales declines for the fourth quarter and year.
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Now, with vaccines offering some light at the end of a very long tunnel, the company is preparing to pounce as — fingers crossed — life starts to return to something more like normal. And that includes a ramped-up effort in luxury through its Forward business.
“We are primed and ready for the reopening of the economy,” said Mike Karanikolas, cofounder and co-chief executive officer, on a call with Wall Street analysts. “As millions of people are getting vaccinated against COVID-19 every day across our markets, trends are already slightly better in the first quarter year-over-year. We see an exciting opportunity for Revolve in the months ahead as more people are finally able to get back to enjoying all the social occasions they’ve been missing out on for the past year.”
As consumers hunkered down for the pandemic, Revolve boosted its penetration in its newer product categories, including beauty, activewear and intimates, and expanded its marketing playbook to keep in close touch with shoppers.
The approach seemed to work.
Revolve’s fourth-quarter net income increased 126 percent to $19 million while sales slipped 5 percent to $140.8 million. For the full year ended Dec. 31, the company’s profits rose 59 percent to $56.8 million as sales decreased 3 percent to $580.6 million.
Investors seemed ready to celebrate, too, driving shares of the company up 9 percent to $40 in after-hours trading Wednesday.
Michael Mente, the company’s other cofounder and co-CEO, reflected on how the pandemic impacted Revolve’s approach, but added that the party has already started back up in some parts of the world.
“A significant headwind during the past year has been that we have not been able to host our marquee in-person events that are our powerful marketing lever particularly for generating social media impact and building the brand long-term,” Mente said. “We are very excited to get back out there to do in-person events again in 2021. Starting this week, actually, where we are hosting four in-person events in Australia, in Sydney, Brisbane and on the Gold Coast. The events are attended by Australia-based influencers.…Australians are making up for lost time enjoying their current summer season like never before.”
Revolve’s sales in Australia increased more than 30 percent in the fourth quarter, which Mente pointed to as “a helpful indicator into how consumer behavior may evolve in other regions as the virus becomes well-controlled.”
The company is also sensing more opportunity in luxury and plans on investing more aggressively in Forward.
“The luxury customer has been very resilient through the pandemic and, with a global market for luxury fashion rapidly shifting to digital, we see a great opportunity to increase the awareness of Forward’s highly curated selection of iconic and original luxury brands,” Mente said. “With a merchandise assortment that is very complementary to that of Revolve, and with Revolve’s large and powerful customer base, we are excited to expand a cross-promotion effort between the two segments.”
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