RealReal Pushes Higher, but Losses Continue
● The resale pioneer also saw its active buyer count hit 1 million.
The RealReal Inc. is aiming higher — and gaining some traction selling more expensive styles — but the resale pioneer continued to post steep losses for the first quarter.
RealReal's net losses for the quarter totaled $82.5 million, which included a $36.4 million restructuring change and compared with losses of $57.4 million a year earlier.
Adjusted losses before interest, taxes, depreciation and amortization narrowed to $27.3 million from $35.3 million a year earlier. And adjusted losses per share totaled 36 cents, better than the 45-cent loss analysts projected, according to FactSet.
Revenues for the quarter ended March 31 fell 3 percent to $142 million.
“We believe our strategy of re-focusing efforts on the higher margin consignment business is starting to deliver results,” said John Koryl, chief executive officer, in a statement.
Koryl, a digital veteran and former executive at the Canadian Tire Corp., became CEO in February and moved quickly to streamline that month, laying off 7 percent of the workforce, or about 230 employees, while also closing flagships in San Francisco and Chicago. And he signaled on Monday that more cost cuts would be coming and were important in the company's push toward profitability.
In the first quarter, the company's consignment revenue grew 22 percent and direct revenue from inventory RealReal owned declined 49 percent.
“Additionally, we made progress on minimizing lower-value consigned items,” Koryl said. “As a result of these actions, we expanded our gross margin in the first quarter, and we were able to deliver a higher take rate, more gross profit dollars, and improved profitability.
“The early results from our key initiatives are encouraging, and we continue to believe that taking these steps will help us achieve profitability,” he said. “Importantly, we continue to project that we are on track to achieve adjusted EBITDA profitability on a full year basis in 2024.”
Despite the lack of profits, RealReal created a lot of the buzz that's helped fuel the resale sector in luxury and has consumer numbers that prove interest in second hand remains strong.
The value of the goods sold through the platform, the RealReal's gross merchandise volume, increased 4 percent to $444 million in the first quarter. And the number of active buyers rose 22 percent from a year earlier to 1 million.
The firm's average order value increased 2 percent to $499.
Now, Koryl just has to put it all together in a way that works with investors, who have proven to be a tough sell.
Shares of RealReal fell 3.1 percent to $1.28 in after-hours trading following the quarterly update on Monday.