The San Francisco-based consignment marketplace, The RealReal, has reported a 10% decline in revenue for the fourth quarter of 2020. However, despite this decrease, the company has seen positive developments in gross merchandise volume (GMV) and has experienced a record number of new buyers, with an increase of 21%. The total revenue for the quarter was $84.6 million, compared to $93.7 million in the same period the previous year.
While consignment and service revenue for the fourth quarter experienced a decline of 16% from $82.5 million to $69.1 million, direct revenue saw a significant rise of 38%, from $11.2 million to $15.5 million. GMV for the quarter reached $301.2 million, showing a 1% year-over-year decrease but an improvement of 235bp compared to the previous quarter.
The RealReal reported a net loss of $53.0 million, or $0.60 per share, for the fourth quarter, compared to a loss of $21.4 million, or $0.25 per share, in the same period the previous year. Despite these challenges, the company’s founder and CEO, Julie Wainwright, remains optimistic. She highlighted that December GMV increased by 6% year-over-year and the GMV for the first quarter of 2021 has already grown by 14% year-over-year.
Wainwright stated that the company’s strategic initiatives, including the opening of smaller neighborhood stores and expanding the authentication center, will position them as a stronger company. In line with this strategy, The RealReal opened a new location in Palo Alto, California, during the fourth quarter. Additionally, the company has opened stores in Brooklyn, New York, and Newport Beach, California, since the start of the first quarter. The RealReal plans to open approximately 10 neighborhood stores by the end of the second quarter.
Although there was a decline in revenue for the full year of 2020, totaling $298.3 million compared to $318.0 million the previous year, there was a 4% increase in direct revenue, reaching $52.6 million. This offset the 8% decline in consignment and service revenue, which amounted to $245.6 million. The company reported a net loss of $177.5 million, or $2.03 per share, for the year, compared to a loss of $96.5 million, or $2.11 per share, in the previous year.
Looking ahead, The RealReal is optimistic about its future prospects. They expect GMV to be in the range of $301 million to $310 million, representing a year-over-year increase of 17% to 20%. Despite the challenges faced in 2020, the company remains confident in its ability to bounce back and continue its growth trajectory.
Useful links:
1. The RealReal Official Website
2. Importance of Gross Merchandise Volume (GMV)
