RealReal says COVID-19 impact on supply chain is over as company looks ahead to holiday season – Community News
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RealReal says COVID-19 impact on supply chain is over as company looks ahead to holiday season

Real Real Inc. is over the pandemic and says in its third quarter results that the effects of COVID-19 on the company’s supply chain are a thing of the past and that a strong holiday season is ahead.

“Based on what we know today, we believe the operational and delivery impacts of COVID-19 for our business are effectively behind us, and we are well positioned for a strong holiday season,” Chief Executive Julie Wainwright said in a statement. the results. .

“In addition, we believe that The RealReal’s unique business model is largely isolated from supply chain shortages and certain inflationary effects experienced by many retailers.”

The Real Real, Inc. REAL,
+18.37%
is an online and physical marketplace for verified luxury shipments. The RealReal sells consignment clothing, jewelry, watches, fine art and home decor.

During the conversation, Wainwright said the company was not impervious to higher shipping costs and labor challenges like many other companies in the retail space. But the diversification of shipping and the automation of the facilities help.

Read: Supply chain delays could now lead to discounts for shoppers, analysts say

Some of Wainwright’s comments are consistent with those of ThredUp Inc. TDUP,
+3.75%,
another second-hand retailer, with both companies highlighting the benefits of their independence from traditional supply chain channels.

Both companies reported better-than-expected third-quarter results late Monday. The RealReal says its gross commercial value (GMV) is up 50% year-over-year to $368 million.

See: ThredUp lowers prices to attract customers who pay more for other goods due to inflation

“We are encouraged by supply trends reflecting home appointments beyond pre-pandemic levels and an uptick in consumer demand for women’s clothing, leading to greater engagement,” Cowen analysts led by Oliver Chen wrote. .

“We believe RealReal is well positioned from a holiday supply perspective, which in turn should lead to consumption by new and existing buyers.”

Cowen reviews RealReal REAL,
+18.37%
stocks outperform with a price target of $19, down from $23.

Wainwright said during the earnings call that 30% of the company’s consignors come from the convenience stores. Still, Wedbush analysts are cautious about the path ahead.

“RealReal’s GMV growth potential is well understood, but given the heavy losses thus far in their history, the most important question is when/whether they can ever be profitable,” analysts said.

Wedbush rates RealReal stock neutral with a price target of $16, up from $14.

Also: Michael Kors bounces back and Versace is in vogue, fueling optimism for Capri

Wells Fargo analysts are more optimistic, pointing to the company’s momentum. Analysts there rate Realreal stocks overweight with a price target of $24.

“While traditional retail has been adversely affected by multiple disruptors (off-price, fast fashion, e-commerce) over the past 10 to 15 years, we believe resale is the next big disruptor in retail. In addition, we believe that the luxury market is one of the most attractive subsectors for second-hand goods (high-quality brands at accessible prices),” analysts said.

Wells Fargo estimated the value of the luxury resale market at $7 billion.

“Given that the market is currently dominated by brick-and-mortar consignment stores, we believe RealReal’s robust digital platform will allow it to capture market share over time.”

RealReal shares were up 14.2% in Tuesday’s trading, though shares are down 19.8% so far.

The S&P 500 Index SPX,
-0.44%
rose 24.7% for the period.