Revolve soars on US $212M debut
shares jump 89%
Online fashion retailer Revolve Group Inc. jumped after raising US$212 million in its initial public offering in one of the year’s best trading debuts.
Shares opened at US$25.16 Friday and climbed as high as US$ 36.52, more than 100- per- cent above their IPO price. The stock finished the day up 89 per cent to US$34.00, valuing Revolve at more than US$2.3 billion.
Revolve sold 11.8 million shares for US$ 18 each, the top of a marketed range of $ 16 to $ 18, according to a statement Thursday. Revolve’s strong showing ranks it among the top five debuts out of 75 U.S. IPOS this year.
The offering f ollows September’s listing by luxury- clothing platform Farfetch Ltd., which raised US$ 855 million in its U. S. IPO. This year, three other e-commerce companies have gone public in the U. S., raising a combined US$471 million, according to data compiled by Bloomberg. That’s amid a surge of higher- profile listings including Uber Technologies Inc.’s US$ 8.1 billion IPO in May. Overall, 74 companies have now raised US$ 26.83 billion so far this year in U. S. listings, the data shows.
Revolve attracts many of its customers through its own Instagram account with more than 5.5 million followers, and through a network of more than 3,500 influencers — users with large followings on social media — and social events.
The company. based in Cerritos, Calif., is profitable, earning US$ 31 million on sales of US$499 million last year, up from net income of US$5.3 million on sales of almost US$400 million in 2017. Revolve said in its filings.
Sales for the quarter ended March 31 rose 21 per cent to $137 million, while net income fell 7.8 per cent to $ 5 million. Revolve’s average order value fell to $259 for the quarter, down from $282 for the same period last year.
Only a quarter of the Class A shares issued in the IPO were sold by the company, according to the filing. The remaining 8.8 million shares were sold by current investors. Those shares will carry one vote each, while Class B shares will have 10 votes each. That will give the Class B owners about 98 per cent of the voting rights, according to the filings.
MMK Development Inc., an entity controlled by co- chief executives Michael Karanikolas and Michael Mente, will control 67 per cent of the voting power.
Revolve plans to use the proceeds to buy back stock from existing stakeholders and to continue growing the company, its filing shows.
Last year, 18 per cent of the firm’s sales came from outside the U.S. Revolve cautions that expanding internationally will likely require fulfilment centres among other expenditures. It also warns that its manufacturing operations in China could be affected by the political and economic climate there, as well as by tariffs imposed by the U.S.