Luxury reseller The RealReal rises after $300 million IPO
Online luxury reseller The RealReal Inc. rose as much as 50 per cent after raising $300 million in its U.S. initial public offering.
RealReal’s shares were up 38 per cent to $27.64 at 1:34 p.m. in New York trading Friday, giving the company a market value of about US$2.29 billion. The shares opened at $28, after the company sold 15 million shares for $20 each on Thursday. It had marketed them for $17 to $19.
The RealReal, founded by chief executive officer Julie Wainwright, makes it easier to sell and buy used luxury items such as clothing, accessories and jewelry on consignment by providing a platform for transactions and verifying that the goods are authentic.
“Shoppers, especially millennials, are thinking more about sustainability and what happens to their clothes,” Wainwright said.
“It was like a drumbeat when we started,” said Wainwright. “Now it may not be the first reason they buy, but it’s the second.”
Internet-based apparel resellers like The RealReal, ThredUp Inc. and Poshmark Inc. have emerged as trendy alternatives to the second-hand clothing market. The RealReal focuses on luxury apparel items from designers like Hermes and Louis Vuitton, catering to the high-end fashion market, while ThredUp and Poshmark feature lower-priced items.
Used clothing, footwear and accessories represent a $10-billion market in the U.S., according to data from market research firm IBISWorld Pty Ltd. Interest from young, sustainability-conscious shoppers has been a boon for the industry, which the firm forecasts will grow around 1.6 per cent a year through 2024.
All this has made old clothing a magnet for investment. Venture capital has poured in, with more than $1.1 billion dropped into used-clothing operations over the past several years, according to data compiled by Bloomberg.
That included more than $350 million in funding for The RealReal and about $130 million for ThredUp. French startup Vestiaire Collective raised $45 million in June to fuel international growth, bringing its total funds to almost $200 million.
The RealReal now has two brickand-mortar stores in Manhattan and one in Los Angeles that collect as well as sell goods.
While the market is intrigued by its growth, RealReal has yet to make a profit. The company posted a loss of $23 million on revenue of $69 million in the first quarter, compared with a net loss of $14 million on revenue of about $46 million for the same period last year.
The offering was led by Credit Suisse Group AG, Bank of America Corp. and UBS Group AG, according to the filing. RealReal trades on the Nasdaq Global Select Market under the symbol REAL.