Real Authentication provides top tier Authentication, Identification and Valuation services for over 100 Designer Luxury Brands: Louis Vuitton, Chanel, Hermes, Prada, Gucci, Fendi and more. Contact us today to shop and sell with the confidence and protection you deserve!
Shares of RealReal Inc.
REAL,
+1.44%
slumped 2.4% in morning trading Tuesday, after the online luxury
consignment site warned of a wider-than-expected net loss for the first
quarter, but provided an upbeat outlook on gross merchandise volume
(GMV). The company also said in response to the negative effects of the
COVID-19 pandemic, it has cut its overall workforce by 10% and
furloughed about 15% of its staff, as it has temporarily closed its
stores and luxury consignment offices. The company said it was off to a
"strong start" for the quarter until the spread of COVID-19 led to
shelter-in-place and social distancing mandates. It now expects a
first-quarter net loss of $39.9 million to $38.9 million, compared with
the FactSet consensus for a loss of $30.4 million. Gross merchandise
value is expected to be up about 15% from a year ago to $258 million;
the average estimate of two analysts surveyed by FactSet was $224.5
million, with a range of $156.9 million and $292.0 million. The stock
has shed 56.9% over the past three months, while the S&P 500
SPX,
0.42%
has lost 14.0%. oa here
Investment analyst Michael Binetti, Credit Suisse,
is out with a bold prediction: “We believe the secondhand/resale market
could grow much faster in the near-term than the +mid-teens growth that
industry sources project.”
As current projections stand, the
combined digitally-native resale and the traditional, largely
brick-and-mortar thrift/donation secondhand fashion market will reach
$51 billion by 2023, according to ThredUp, a major player in the resale fashion market and the primary source of the industry’s data.
By
2023, the resale segment is expected to account for 45% of the
secondhand apparel market’s sales or $23 billion, growing from a mere
25% ($7 billion) of the total $28 billion in 2019. The RealReal, the recently made public luxury resale company, the privately-held ThredUp, and social commerce peer-to-peer marketplace Poshmark are the current resale leaders.
Dynamic growth in the online sales channel will be the main driver of
growth, gaining twice as fast as thrift/donation or over 30% per year
from 2019 to 2023. This will be thanks to consumers, most especially
women, gaining awareness of the convenience of this new model as an
alternative to giving bags of old clothes to Goodwill, Salvation Army or
local thrift stores.
As mentioned, Credit Suisse’s Binette
expects it to advance even faster, though he didn’t speculate just how
much faster it will grow. However, he said, “We’ve networked extensively
with management teams across the secondhand retail category and the
most consistent comment we’ve heard is that the industry unanimously
believes it is barely scratching the surface with the addressable market
of consumers that would consider re-selling/consigning online.”
Supply, not demand is the industry’s challenge
Increasingly,
women are willing to give secondhand shopping a try, with ThredUp
reporting the number of women who’ve purchased secondhand has grown from
44 million in 2017 to 56 million in 2018, roughly half of all adult
women.
However, the linchpin for resale’s future is getting
inside people’s closets and convincing them to turn over enough good-old
stuff that online buyers will want.
After all, they have been
filling their closets with off-price (Marshalls, TJ Maxx), fast fashion
(Zara, H&M), value chain (Walmart, Target) clothing at an aggressive
pace, but this isn’t the stuff that a vibrant resale market is made
on. The ThredUp study, supplemented with data from Credit Suisse,
estimates that about 35% of consumers’ closets in 2018 are accounted for
by clothing from these three sources and their share has grown from 28%
since 2008.
Instead, the stuff consumers are most likely to want
to buy in resale is department store (14% share of closet in 2018) and
other specialty retail (13%) brands, which they also may want to hold
onto longer. Mid-priced fashion (Gap, J.Crew) that comprises 20% share
of closet today may go for ThredUp or Poshmark, but not The RealReal.
It
isn’t consumer demand that could hold the fashion resalers back. It’s
getting their hands on enough stuff that their customers will want. As a
result, each player’s consignment strategies are critical to their
future success.
Getting real is The RealReal’s key consignment strategy
The
RealReal identifies unlocking the ~$200 billion of luxury goods
available in the U.S. for the resale market as its greatest market
opportunity, as well its most critical challenge.
“The biggest obstacle to growth for REAL is acquiring the right level and types of supply,” writes Cowen’s Oliver Chen, in a report on a recent meeting with The RealReal’s CEO Julia Wainwright and CFO Matt Gustke.
“Management
highlights it is more difficult to get someone to consign for the first
time,” he explains, but adds that after their first consignment, The
RealReal customers typically return two-to-three times a year.
With
Gucci, Louis Vuitton, Chanel, Prada and Hermès its leading brands, The
RealReal has found making face-to-face connections with wary luxury
consumers critical to getting prime merchandise. So, it operates three stores,
two in NYC and one on Melrose Avenue, Los Angeles, where well-heeled
shoppers can come in and meet with authentication experts. Such personal
connection raises their comfort level.
The RealReal also
operates 11 locations nationwide for jewelry, watch and handbag
valuations, plus the convenience of free “white glove” in-home
consultation and pickup in 20 markets.
In a previous discussion with CEO Julie Wainwright,
she shared that not only do the stores pave the way for better
consignments, they also result in an order size twice as large as is
typical online. “It is a marketing tactic and sales tactic and product
acquisition tactic,” Wainwright said. “We find we get lots of
high-quality consignments when we do pop-ups,” like one recently in Las
Vegas.
The RealReal is approaching half a million buyers and if
turning new RealReal buyers into consignors is its primary way to source
new supply, it has a long runway.
According to the BCG-Altagamma True-Luxury survey
among consumers who met a threshold of luxury spending (~$5,500 in past
year), only half of the U.S. luxury consumers surveyed have
participated in the secondhand market. Among the other half, 21% have
sold and bought, 18% have purchased only and 11% have only sold.
The
RealReal is still in the early days in tapping its potential market.
“Resale drives a perpetual consumption cycle that fuels recurring
consignments and purchases as it provides liquidity to consignors to
purchase new and secondhand items – this should support solid GMV (gross
merchandise value) growth over the long-term,” Chen writes.
ThredUp has it in the bag
ThredUp’s
consignment strategy is literally in-the-bag with its “Clean Out Your
Closet” service where a potential consigner requests a postage-paid
Clean Out Kit to bag up unwanted items. These item can either be sold
for cash or credit to use at Reformation or Polarn O. Pyret for
childrenswear or donated to charity along with a $5 cash gift.
The company notes, however, that it is picky about what consignments
it accepts: only items in pristine condition with no damage or
alterations, including missing sizing information. Given those criteria,
ThredUp reports it only retains about 40% of the items shipped for
resale. The rejects can be returned to the sender for a small fee or
donated to charity.
Right now, through October 20, ThredUp is
hot on the trail for fall fashion, offering a 20% extra payout for
seasonally-appropriate sweaters, coats, boots, overalls, jumpsuits and
designer handbags. In-demand brands it is on the hunt for include
Madewell, Patagonia, Lululemon, Everlane, Sorel, Eloquii and Torrid.
ThredUp is also crossing over into physical retail in new partnerships just announced with Macy’s and J.C. Penney. ThredUp departments will shortly open in 40 Macy’s and 30 J.C. Penney locations.
These
locations will give consumers an extra dose of confidence and
credibility to ThredUp when they first meet the brand there. No word
that consignments will be accepted there, but one can imagine each
department will have a stack of clean-out bags readily at hand.
Poshmark takes a do-It-yourself approach
Poshmark claims to be the No. 1 fashion buying and selling platform, with some 50 million sellers. A recent survey by Raymond James
supports that claim, with 67% of women surveyed recognizing the
Poshmark name, as compared with 44% who know ThredUp and 12% The
RealReal.
But unlike ThredUp and The RealReal, Poshmark operates
under a different business model. It doesn’t take possession of the
clothing for sale. It works as a peer-to-peer marketplace where sellers
list items and Poshmark takes a piece of the action once a sale is
completed.
With its stripped-down business model, it gives
sellers the tools to make sales, but also requires them to do the heavy
lifting to photograph, describe, and price each item. Poshmark provides a
prepaid shipping label when an item is bought, but the seller has to
package it and take it to the post office to ship.
It also
supports sellers with what it describes as virtual shopping parties
where people gather on the app to enjoy selling events around a theme or
brand. Success in fashion has given Poshmark confidence to branch out into home decor and housewares.
Awareness builds customers and consignors
To
attract people to the circular fashion resale economy, both Credit
Suisse’s Binetti and Cowen’s Chen identify building awareness of the
potential of resale platforms like The RealReal, ThredUp and Poshmark is
critical.
To create awareness, all three companies have taken to
television to get the word out. In that Poshmark is the leader, running
14,872 spots in the last 30 days and ranking No. 311 in terms of
overall advertising spending, according to ISpot.TV. ThredUp (2,674 airings and No. 839 in sending) and The RealReal (2,533 airings and No. 1,020 in spending) lag far behind.
And
from that awareness, consignments grow. Signs are that American
consumers are already lightening their load, as the ThredUp study
reports consumers have reduced the number of items in their closets from
164 in 2017 to 136 in 2019. But that also means, they may have fewer
choice items to pass along into the resale channel.
Ultimately
Poshmark’s heavy-lifting in the awareness department may be a blessing
for both ThredUp and The RealReal. After a few times a person does all
the work on the back end to make a sale –or not make a sale if the price
isn’t right or the description fails – my guess is that people looking
to get in on the resale action may quickly turn to the frictionless and
more convenient alternative that ThredUp and The RealReal offer.
Poshmark
may open the door for customers to try online resale, but I bet that
ThredUp and The RealReal will be the ones that will keep them around for
the long haul and get the best pickings from their closets.
Analysts are bullish about The RealReal even after department store discounts posed a threat:
Analysts are bullish about The RealReal despite the unexpected discounted in the luxury marketRealReal Inc. stock soared after earnings indicated that even when
luxury goods are sold at a discount, The RealReal’s secondhand goods are
still in high demand.
The RealReal
REAL, +0.84%
reported sales in line with expectations during its first quarterly announcement post-IPO. Gross merchandise volume (GMV) rose 40% year-over-year to $228.5 million.
Shares
were up in Tuesday after-hours and in Wednesday premarket, though they
fell about 5% in early trading alongside many others after concerns
about global economic data.
The RealReal stock began trading on June 28.
“We
view the positive after-market stock reaction reflects some easing of
investors’ concerns on higher promotions in the luxury space weighing on
The RealReal’s growth trajectory,” Cowen analysts led by Oliver Chen
wrote.
“We
acknowledge that average order value (AOV) was flat year-over-year due
to earlier-than-expected promotions in the luxury space. However,
management highlighted promotional trends in 3Q appear similar to prior
years and they expect AOV in 3Q to improve year-over-year.”
Analysts say they’re “encouraged” by the loyalty of the customer base and its progress in automation.
The
RealReal’s Chief Executive Julie Wainwright said department store
discounting isn’t new for the company and it has already seen a fast
recovery. The impact is felt more in women’s clothing.
“I would
say if department stores get desperate in September, October, we might
have some of that tension, again that will be offset by high
seasonality,” she said on the earnings call, according to a FactSet
transcript.
“[T]his this is one of the beauties of having product
diversity because we don’t see it on fine jewelry, watches, men’s and
streetwear, and even women’s handbags,” she said.
“While
2Q AOV was modestly below expectations due to increased promotional
activity across the industry, management believes the company is
partially insulated from periods of aggressive discounting given its
category diversification, and the inverse relationship between pricing
and active buyer growth,” wrote Stifel analysts in a note.
“As
the leader in the luxury consignment space, we believe The RealReal has
strong growth potential and ongoing investments in automation should
drive operating leverage in pricing and fulfillment.”
Stifel rates The RealReal shares buy with a $30 price target.
The RealReal shares have fallen 44.6% over the past month while the S&P 500 index
SPX, -2.93%
is down 5.8% for the period.
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)
Sartorially speaking, there's nothing
quite like that feeling of excitement and satisfaction you get when you
manage to score a quality designer piece at a great price. Particularly
when that item is trending, about to become huge, or will last you a
lifetime.
This season, there are a few items I've been eager
to invest in: Think Carrie Bradshaw–style bags (baguettes, embellished
shoulder styles, logo-covered picks), not to mention a supple leather
jacket, gorgeous slouchy boots, silk scarves, and a posh pair of long
gloves (they're trending right now, and they're très sophistiqué).
I did a little digging at one of my favorite luxury consignment stores, The RealReal,
to see if I could snag any of the items on my wardrobe wish list for
less, and the e-tailer delivered. Scroll to shop the trending items I
unearthed, and remember: They disappear quickly, so if you have your
heart set on something, scoop it up ASAP!
All your favorite fashion
influencers are currently donning Dior's classic '90s Saddle bag.
They've been all over our Insta feeds, and the trend shows no sign of
slowing down.
Logo is a go this fall! Wear your
favorite designer's logo front and center on just about everything
(bags, tights, tops—you name it). Chanel your inner Carrie Bradshaw with
this chic Fendi shoulder bag.
Fall and winter are all about
gloves—preferably ones that extend to the elbow and come in practically
every color. They may not be iPhone friendly, but they're insanely chic.
We're obsessed with these "naked"
sandals here at the Who What Wear office—especially since they're priced
at only $65! The jewel embellishments perfectly exude fall's glitzy
metallic trend.
I cannot wait to adorn my lobes
with fall's must-have glitzy chandelier earrings. Dress up your jeans
and tee with these danglers, or pair them with a trending '80s frock.
The catwalks were replete with
plaid this season, from colorful preppy prints to neutral checks. A
plaid blazer may just be the answer to any dressing dilemma.
Pinterest
Shop
Pinterest
Shop
Pinterest
Shop
Pinterest
Shop
