The RealReal Will 'Dominate Digital Consignment Space'

Several digital native fashion retailers are worth taking a look at, according to DA Davidson.
Analyst John Morris initiated coverage of several fashion retailers Tuesday, including Revolve Group LLC RVLV 0.19% with a Neutral rating and $19 price target.
“As a digitally native brand, Revolve sits squarely at the intersection of sophisticated data-driven assortment planning and coveted fashion apparel,” the analyst said.

Inventory Overhang Remains A Concern

In the near term, Revolve is struggling with growing pains that are likely to last for several quarters as it "right-sizes" inventory and invests in future growth, Morris said.
Part of Revolve’s inventory overhang has been planned, as the company is building up for the launch of its superdown division and braces for international expansion, he said.
“Yet inventories have risen significantly faster than sales, most recently rising 31% in 3Q, ahead of 21% sales growth,” the analyst said.
A portion of the higher inventory levels have led to more discounting that weighs against gross margin upside, Morris said.
"We see these headwinds continuing for several more quarters."

The Real Deal

DA Davidson initiated coverage of The RealReal, Inc. REAL 5.2% with a Buy rating and $22 price target.
The RealReal is a brand destination with several first-mover competitive advantages in a market that is displaying accelerating growth, Morris said.
RealReal has a unique business model that makes it possible for the company to be a front-runner for trends like sustainability, uniqueness and individuality that are favored by the millennial and Gen Z demographics, he said.
"With a seamless supply chain, high customer retention, and substantial take rate, we expect REAL to dominate the digital consignment space,” the analyst said.
The RealReal’s authentication process has come into question of late, but this went unmentioned in the DA Davidson note.

Stitch Fix: Rising Ad Spend Tempers Sentiment  

Stitch Fix Inc SFIX 2.34% reported a first-quarter earnings and sales beat Monday, and several analysts highlighted the company’s new "direct buy" feature as a catalyst for future growth.
DA Davidson took a more guarded stance on Stitch Fix, initiating coverage with a Neutral rating and $27 price target.
Morris said he is cautious about Stitch Fix’s growth prospects, cost efficiency and a lack of visibility.
"We rate it Neutral because the company is showing a decelerating client growth rate despite significantly increasing marketing spend at a time when its core business is more challenged by competition and the complexities of growth which is likely to erode margins in the near term."
Stitch Fix is chasing new clients, and its advertising spend as a percentage of sales increased from 3% in 2016 to 8% in 2018 — yet its client growth rate is decelerating, the analyst said.
The e-commerce site is expecting  advertising spend as a percentage of sales to settle at around 9%-11% in FY2020, according to DA Davidson.
Increased competition could threaten the company’s market share, Morris said.
“According to our industry sources, Amazon.com, Inc. AMZN 2.72% and Nordstrom, Inc. JWN 2.05% lust for the customer data gathered from a subscription service: sizes, style preferences, direct feedback, etc.”
The new fashion subscription service entrants Rent the Runway and Urban Outfitters, Inc.'s URBN 0.22% Nuuly are other competitors clawing for market share, according to DA Davidson.  oa here

StockX's new CEO tells Jim Cramer going public is 'certainly our objective as a company'

If StockX has plans to hold an IPO, it now has a person at the helm with experience in public markets.
StockX, the Detroit-based e-commerce marketplace that started out as an exchange for limited-edition sneakers, in June brought on eBay alum Scott Cutler to lead the privately held company as CEO. In the same month, the company raised $110 million in a Series C funding round to give it a $1 billion valuation.
The resale platform, which has expanded into other high-end products, was launched in 2016 by Josh Luber and billionaire Quicken Loans founder Dan Gilbert.
"We have world-class investors, including Dan, that are in this and I think wouldn't that be great if we ended up with that [public] outcome, that's certainly our objective as a company," Cutler, who previously was a senior vice president at eBay and president of StubHub, a unit of eBay, told CNBC's Jim Cramer in a "Mad Money" interview Monday. "But we're going after a global opportunity with consumers around the world and we're super excited about this innovation in commerce."
StockX and its 800 employees across the United States and Europe serve customers in 170 countries, according to Cutler. The e-retailer is one of the many new companies that are helping change the direction of the industry.
Before eBay, Cutler was an executive vice president at the New York Stock Exchange for nearly a decade. He succeeded co-founder Luber as chief when he joined StockX earlier this year. Intrigued by its business model, Cutler said he first became acquainted with StockX in its infant days and got connected with Luber via LinkedIn.
"I saw the idea and I thought it was just transformational, the combination of all of these things together in this company," he told Cramer, "and then who would have known a few years later that I would join and have the opportunity to run it in partnership with the founders."
StockX already has its mind on the IPO process, though not the kind that stock investors can get their hand on. Last week, the company rolled out a collectibles initiative, its fifth product category, in collaboration with Adidas dubbed "The adidas Campus 80s StockX IPO."
Through the partnership, three designers from across the globe are tasked to design, create and produce a total of three "unique sneakers" in 10 days, Cutler said. StockX then debut 330 pairs of each sneaker on its online market where customers place bids over the course of three days.
There were 10,000 bids placed with 20% coming from outside of the United States, the CEO said.
"This is the first time where a brand comes direct into the marketplace and allows the consumer to dictate the price that they're willing to pay for these rare, one-of-a-kind sneakers," Cutler said. "When it came down to it, when you talked about the average clearing price was a little over $200 across all three, and 90% of the bidders paid less than what they bid on the sneakers."

Questions for Cramer?
Call Cramer: 1-800-743-CNBC
Want to take a deep dive into Cramer's world? Hit him up!
Mad Money Twitter - Jim Cramer Twitter - Facebook - Instagram
Questions, comments, suggestions for the "Mad Money" website? madcap@cnbc.com

Correction: A previous version of this story misidentified StockX co-founder Josh Luber and Quicken Loans founder Dan Gilbert. 
oa here

Waddell & Reed Financial Inc. Invests $8.02 Million in RealReal Inc (NASDAQ:REAL)

 

Waddell & Reed Financial Inc. bought a new position in shares of RealReal Inc (NASDAQ:REAL) during the 2nd quarter, according to its most recent Form 13F filing with the SEC. The institutional investor bought 277,445 shares of the company’s stock, valued at approximately $8,018,000. Waddell & Reed Financial Inc. owned approximately 0.34% of RealReal as of its most recent filing with the SEC.
Several other institutional investors and hedge funds also recently added to or reduced their stakes in the company. FNY Investment Advisers LLC bought a new stake in shares of RealReal in the 2nd quarter valued at about $63,000. Pendal Group Ltd acquired a new stake in RealReal during the 2nd quarter worth approximately $146,000. Maven Securities LTD acquired a new stake in RealReal during the 2nd quarter worth approximately $289,000. Crestline Management LP acquired a new stake in RealReal during the 2nd quarter worth approximately $482,000. Finally, CIBC Private Wealth Group LLC acquired a new stake in shares of RealReal in the 2nd quarter valued at $575,000. 25.14% of the stock is currently owned by institutional investors.

RealReal stock traded up $0.66 during trading on Friday, reaching $19.35. The company had a trading volume of 2,103,900 shares, compared to its average volume of 1,467,223. RealReal Inc has a 12-month low of $12.58 and a 12-month high of $30.05. The business’s 50 day moving average price is $16.23.
RealReal (NASDAQ:REAL) last released its earnings results on Tuesday, August 13th. The company reported ($0.28) earnings per share (EPS) for the quarter, beating analysts’ consensus estimates of ($0.34) by $0.06. The company had revenue of $71.00 million during the quarter, compared to analysts’ expectations of $70.10 million. The business’s revenue for the quarter was up 51.1% compared to the same quarter last year. As a group, analysts anticipate that RealReal Inc will post -1.24 EPS for the current fiscal year.
REAL has been the topic of a number of recent analyst reports. Stifel Nicolaus reaffirmed a “buy” rating and issued a $30.00 target price on shares of RealReal in a research report on Wednesday, August 14th. Credit Suisse Group initiated coverage on shares of RealReal in a research note on Tuesday, July 23rd. They issued an “outperform” rating and a $30.00 price objective for the company. UBS Group initiated coverage on shares of RealReal in a research report on Tuesday, July 23rd. They set a “buy” rating and a $30.00 target price for the company. Bank of America cut their target price on shares of RealReal from $28.00 to $24.00 and set a “neutral” rating for the company in a research report on Monday, August 12th. Finally, Cowen began coverage on shares of RealReal in a research report on Tuesday, July 23rd. They issued an “outperform” rating and a $32.00 price objective for the company. Two analysts have rated the stock with a hold rating and six have given a buy rating to the company. The company currently has a consensus rating of “Buy” and a consensus target price of $28.14.

oa here

Luxury online reseller The RealReal in talks with banks for IPO: sources

Business U.S. online luxury reseller The RealReal Inc is talking to investment banks about the possibility of an initial public offering (IPO) later this year, people familiar with the matter said on Friday.

FILE PHOTO: Luxury handbags for sale are displayed at The RealReal shop, a seven-year-old online reseller of luxury items on consignment in the Soho section of Manhattan, in New York City, New York, U.S., May 18, 2018. REUTERS/Mike Segar

REUTERS: U.S. online luxury reseller The RealReal Inc is talking to investment banks about the possibility of an initial public offering (IPO) later this year, people familiar with the matter said on Friday.

The company - which specializes in online secondhand luxury apparel and goods - has sent out a request for proposals to prospective advisors and underwriters to manage the listing this year, said the sources, who asked not to be identified because they were not authorized to speak publicly.
The RealReal declined to comment.

In July last year, The RealReal raised US$115 million of private funding in a deal led by Perella Weinberg Partners, with additional participation from new investor Sandbridge Capital and existing investor Great Hill Partners. The deal valued the company at US$745 million, according to data provider PitchBook.

Since then, the company, which was founded in 2011, has focused on expanding its brick-and-mortar presence with outlets in new areas and more online fulfillment centers.

The RealReal's success is built on a profitable mix of the boom in e-commerce, the millennial interest in the price and environmental benefits of recycled clothing, and the caution of established high-end brands about what selling their wares on the web can do to brand value.

Fellow e-commerce platform Farfetch went public in last September at the top of its target IPO price range, raising US$885 million.

(Reporting by Joshua Franklin and Harry Brumpton in New York; Editing by Sonya Hepinstall)

ORG HERE

Farfetch delivers $43,000 fur coats via an app and it's about to IPO. Here's its story.

This story originally appeared at Thinknum Media here. To see all the data referenced, click here for access.

E-commerce isn't all deals, bargains, and free shipping. In the case of Farfetch, it's $43,000 fur coats and $32,000 watches delivered to your door, and by most accounts, there is enough of a market for such high-end items that it's not just doing well: it's about to go public.
Founded by José Manuel Ferreira Neves in June 2007, Farfetch's ($FARFETCH) mission is to be "the global technology platform for luxury fashion, connecting creators, curators and consumers," according to its IPO application. The online luxury fashion retail platform made $385.9 million in 2017 — a year where it reportedly had almost a million active customers — while posting after-tax losses of $112.2 million.
We track inventory, social, and Glassdoor data for the startup, which, when combined paint a useful, external data portrait of the company as it seeks public investment. Here's some of that data broken down.

What does Farfetch sell?

Right now, Farfetch sells over 100,000 products, ranging from "budget-friendly" fashion brands such as Kate Spade ($NYSE:KATE), Nike ($NYSE:NKE), and Levi's jeans, to fine watches, fur coats and other budget-breaking items that go for tens of thousands of dollars.
Out of all those products up for sale on August 29, 2018, the average price was $592.65.
Breaking it down by category, an average women's handbag on the platform will run you over $1,100, while the average pair of women's shoes costs $529.
In terms of what exactly is being sold on the website, our database tracks every single product and its various styles, which gives an idea of what brands are giving the most inventory variety. That title goes to Prada ($HK:1913), a company known for its designer handbags, followed by rival fashion house Yves Saint Laurent.

Most-expensive items sold by Farfetch

With plenty of designer brands on offer, you might wonder what the most farfetched (pun intended) and expensive fashion statement is on the website. On August 26, seven out of ten of the most expensive items on the platform were listed for $30,000 or more.

Most of these bank-busting fashion pieces are from luxury Swiss watch manufacturer Ulysse Nardin, which is part of the French luxury group Kering S.A. ($EPA:KER) that also owns Alexander McQueen, Gucci and Balenciaga.
But the most expensive single item, a fur coat from New York City-based designer Thom Browne, is definitely a stand-out among the ultra-expensive flashy timepieces.

App ratings

Farfetch is available both as an app and website, allowing fashionistas to order from their iPhone or Android phone (or laptop, of course). On both devices, the Farfetch app does well, touting a 4.3 star rating on the Google Play Store and a full 5 stars on the Apple App Store.

As well as filing for its IPO this past week, Farfetch recently purchased an app called Fashion Concierge that was founded by Daniela Cecilio, the second wife of Farfetch's CEO. No word yet on what this would mean for its mobile application, but it will be interesting to see how it will be integrated with what's currently working for them.

Social media presence

Along with its sales success, Farfetch has a strong presence on social media. On Twitter, its following is relatively steady above 80,000 accounts, while its Facebook page is inching closer towards the 2 million like count as the end of 2018 approaches.

Outside of its page, users are talking about the brand all around Facebook. Since we started tracking its Facebook presence in April 2017, Farfetch's most-impressionable time of year was during the holiday season, right around when the New York Times profiled the "luxury e-tail" industry as part of its year-end issue (and when people scramble for gifts):

Employee workplace ratings

In terms of the company's internal health, Farfetch employees are applauding its CEO, giving José Neves an impressive 92 percent approval rating on Glassdoor.

As Farfetch is preparing to go public, its current and outgoing workforce is beginning to grow uncertain, or even worried, of the company's future. Since the new year, its business outlook rating, based on how employees think the company will fair in the next six months, dropped nearly 20 percent.

Hiring practices

Although its future is uncertain, Farfetch has plenty of opportunities for those interested in joining it rather than investing. Overall hiring is up since the beginning of the year, but slightly down as it makes its bid to become a publicly traded company.

Most of these listings are for jobs based at its headquarters in the United Kingdom, or at several of its offices in Portugal.

Heading toward IPO

Farfetch filed to go public on the New York Stock Exchange under the ticker FTCH. The company is aiming for a $5 billion valuation and, given the size of the global market for personal luxury goods — $307 billion in 2017 according to Bain — Neves and company just may hit those marks.
"We are a technology company at our core and have created a purpose-built platform for the luxury fashion industry. Our platform consists of three main components: applications, services and data," the company noted in the filing.
-James Mattone, Thinknum Media
*To see the data referenced in this story, click here to request access.

The RealReal Is Officially Consignment Queen

$173 Million later, the new funding comes just in time for the retailer to open its first store.

 

While it’s fair to say e-commerce has totally changed shopping — putting mall brands out of business and spawning a new category of fast fashion retailers on steroids — the luxury market has had a harder time breaking out online. High-end brands are notoriously uneasy about e-commerce for fear of eroding exclusivity, and sites like Amazon, Alibaba, and eBay, riddled with counterfeit goods, have not proven to be great business partners.

You can get your Louis Vuitton and Hermès another way though: The secondhand market has found a way to make luxury and online shopping work, and San Francisco-based site The Real Real is leading the sector. This morning, it confirmed it’s just closed on $50 million in funding from private equity firm Great Hill Partners. The startup’s largest amount of funding to date brings the total amount it’s raised to $173 million. The upcoming wad of cash will go toward expanding the business, which consists of more than 800 employees and three giant fulfillment centers, and a company spokesperson confirms The Real Real will eventually file for IPO, though there are no current plans in the works.

The Real Real remains the fastest-growing of the bunch; even the Kardashians and Saudi princesses use it.

The RealReal is one of many secondhand luxury shopping companies that have leveraged the ease of the internet and enticed shoppers to buy and sell luxury online (although not all have survived). But while sites like Tradesy, ThredUp, and Vestiaire Collective have cashed in on this previously untouched sweet spot, The Real Real remains the fastest-growing of the bunch; even the Kardashians and Saudi princesses use it. The site boasts five million users, has sold four million items to date, and is expected to surpass $500 million in revenue this year.

To Julie Wainwright, the company’s founder and CEO, the site’s success really boils down to trust — a major factor in both online and luxury shopping. Wainwright started The Real Real in 2011 during a time when the options for selling luxury were feeble.

“There was nothing out there that provided the level of service and trust that needed to be added to the equation,” Wainwright told Racked in an interview a few months ago. “eBay can say 90 percent of its products are legitimate, but then what about the other 10 percent? There were consignment stores, but the space was always limited, and most of them weren’t big enough to be sophisticated. I wanted to construct a business that gives you the best of the internet, and then fills in where the internet leaves holes on trust, authentication and service. We take off of the top of eBay and the bottom off Sotheby's.”

Part of the appeal of the startup is that it employs luxury buyers, art curators, gemologists, and watchmakers to authenticate product — not quite as high-end as shopping at Christie’s, but not quite a pawn shop either. The Real Real has employees who visit homes to evaluate product in every major city in the US, and perhaps most importantly, the site takes ownership of listed items, so shoppers can feel secure when splurging — and oh, are they splurging.

Listings have hit as high as six figures (while Wainwright wouldn’t confirm the average listing price, she has said that “Net-a-Porter[‘s] average basket is $430, and ours is bigger.”). These days, The Real Real is selling everything from clothing to art to furniture to diamonds, Wainwright told Racked that 25 percent of its customer base is men, which probably is a nod to the site’s robust list of watches and sneakers.

The icing on the cake here is that The Real Real sees itself as a player that’s bolstering the luxury sector, not preying off of it. In 2017, it is expected to pay almost $300 million to those who are selling on the site, and the company says this money will then be spent “back in the primary market, continuing the luxury lifecycle.” The company is also collecting data on luxury brands, and is currently in conversations about potential partnerships with brands like Louis Vuitton, according to TechCrunch. Wainwright told Racked a third of its customers are millennials, and The Real Real studies which brands are popular by age demographic.

The company is also collecting data on luxury brands, and is currently in conversations about potential partnerships with brands like Louis Vuitton.

“I’ve met with all the top brands and I tell them that I’m the gateway drug for their brands, and some are in trouble,” she told TechCrunch last month. “Dolce is in trouble. We pick it up from people over 40 [years of age] and sell it to people over 50. There’s a whole disconnect with its advertising and they know it. They aren’t reaching millennials at all. We can also predict trends... if you have Valentino Rockstuds, hand ’em over, because the party is over.”

As part of its ongoing growth strategy, The Real Real is getting into brick and mortar. Wainwright tells Racked she can envision opening a giant store of sorts in five years that’s dedicated to secondhand merch — “a superstore in a major metropolitan area that has one floor dedicated to women's fashion, one to men’s, one to home, and one for art.”

For now, The Real Real is executing its plans for store expansion on a more practical level: This winter, it will open a shop in New York City’s Soho neighborhood that will double as a valuation space and a store. Wainwright has said that the new store will have 100 Birkins on the wall and well, nothing can really top that.