ThredUp Feels Economy Pinch as Budget Shoppers Pull Back
The economy has come for ThredUp — shaking up its value-conscious customer base — but chief executive officer and cofounder James Reinhart said he is adjusting and continuing the march toward profitability.
ThredUp still has a ways to go, however — and has joined the growing list of companies cutting staff to help it get there.
More from WWD
The firm’s second-quarter net losses widened to $28.4 million, weighing in at 37.2 percent of revenues, and compared with losses of $14.4 million, or 24 percent of revenues, a year earlier.
Adjusted losses before interest, taxes, depreciation and amortization also widened, to $13.5 million from $9 million a year earlier.
But the top line continued to grow.
Revenues for the three months ended June 30 increased 27 percent to $76.4 million as the number of active buyers grew 29 percent to 1.7 million and the number of orders rose 40 percent to 1.7 million.
“We are facing a consumer environment that is much different than it was just two months ago,” Reinhart told analysts on a conference call, noting the firm’s shoppers began to struggle in the back half of June.
The company’s customer base is splitting into two groups, with the average order value of the discount segment dropping 7 percent and the upscale shoppers pushing their average order value up 15 percent.
“Given the volatility we’re seeing with the consumer, it’s incredibly hard to predict exactly how the customer is going to behave in the back half of the year, a period during which we also have challenging year-over-year comparisons,” the CEO said. “With that said, our priority in the coming quarters and into 2023 is reaching break even on an adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] level and we’re planning to get there by managing the variables within our control.”
That includes the shuttering of a processing center and layoffs amounting to about 15 percent of the corporate workforce during the quarter. The company started the year with 398 workers outside its distribution centers, which employed an additional 2,496 people.
ThredUp is the latest tech-driven fashion company to trim its workforce, joining the likes of Warby Parker and Allbirds — not to mention the likes of Google, Meta, Microsoft and even Tesla.
“We are actively making adjustments to reduce our cost structure and modifying our capex plans to not only weather this challenging economic period, but importantly to come out profitable on the other side, positioning us for share gains when consumer health returns,” the CEO said.
