Amid supply chain woes, which have been dogging a variety of retail, tech and other sectors, fashion resale platform ThredUp set an all-time quarterly revenue record. The company raked in $63.3 million over the third quarter of 2021, pegging 35-percent growth over last year.
“Third-quarter marked another quarter of exceptional financial performance, with our platform demonstrating strong resilience amidst headwinds posed by the pandemic,” said James Reinhart, ThredUp chief executive officer and cofounder, in a statement.
Adjusted earnings loss of $7.8 million came in at 12 percent of revenue versus 16 percent, or $7.5 million, compared to the year-ago quarter. Gross profit of $46.1 million marked 41 percent over the previous year, while gross margin grew, with 73 percent coming in over the 70 percent in the same quarter last year.
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Active buyers of 1.4 million and orders of 1.3 million showed year-over-year growth of 14 percent and 28 percent, respectively.
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The results impressed Wall Street, which sent shares soaring some 23 percent in after-hours trading.
The enthusiasm makes sense, considering the challenges that have been assailing the broader fashion industry. In October, cotton prices hit the highest point in a decade.
“As if retailers don’t have enough things to worry about with supply chain constraints and labor shortages,” UBS analyst Robert Samuels wrote in a note to clients. Now dwindling stock levels for new garments appear to be choking the fashion business, with Adobe Analytics reporting that, across U.S. online retail, the apparel sector hit the top spot for out-of-stock levels leading into the holidays.
But at ThredUp, “supply continues to appear endless, demand for secondhand is increasing with more first-time buyers trying ThredUp, and we’re doubling down on infrastructure investments so we can continue providing our buyers with a vast and ever-changing selection of great brands at great prices,” Reinhart continued.
Essentially, the scenario puts resale platforms like ThredUp, Poshmark and The RealReal in positions of strength, leading analysts to put their “buy rating” stamp on the stocks. Poshmark reports third-quarter earnings on Tuesday. Luxury-oriented The RealReal, like ThredUp, managed to narrow losses, which, adjusted for one-time gains and costs, came in at 47 cents per share. Revenue climbed 53 percent to $119 million, the company reported.
“While many retailers have been forced to raise prices due to inflation or supply-chain pressures, we do not have the same level of exposure. ThredUp’s U.S. business is entirely domestically sourced from our sellers, and we do not rely on direct manufacturing for supply,” Reinhart added on Monday. “This means consumers can always find a vast and ever-fresh selection of secondhand items on our site — 100 percent of which are already in stock and ready to ship. As a result, we see a compelling customer-acquisition and wallet-share opportunity in the near term.
“We have chosen to strategically lower prices in order to engage as many customers as possible during a time when consumers are feeling price pressure in many other parts of their life,” he said.
ThredUp has had a rare year, including an impressive initial public offering in March, which landed at nearly 43 percent above its IPO price on its first day of Nasdaq trading.
The company also plans to fully launch a new, four-level distribution center outside Dallas, Texas. Once it fully opens, the facility — ThredUp’s largest and most-automated to date — will more than double the business’ total distribution network capacity, at 16.5 million items.
ThredUp also just closed its Remix acquisition deal in October, setting off its European expansion for the fourth quarter, along with other investments in Latin America. It also noted the growth of its “resale-as-a-service” offering, with partners like Adidas and an expansion of its Madewell partnership with A Circular Store located in Brooklyn, N.Y.
The company’s fourth-quarter guidance, including the Remix acquisition, sets expectations for revenue between $69 million and $71 million, gross margin of 65 percent to 67 percent and adjusted earnings margin loss of 17 percent to 15 percent. ThredUp expects to close out 2021 with revenue of $248 million to $250 million and gross margin of roughly 71 percent and adjusted EBITDA margin loss of some 15 percent.