“We are not only going to persevere, we’re going to end up on top,” said Julie Wainwright, chief executive officer, addressing investors and analysts on a conference call conducted from her home.
But she acknowledged, “This is a crazy time” and that “fluid” was going to be a byword in the COVID-19 business environment.
Net losses for the quarter ended March 31 widened to $38.3 million from $23 million a year earlier.
Even with COVID-19 disruption bearing down by the end of the quarter, The RealReal still managed top-line gains and pushed revenues up 10.8 percent to $78.2 million from $70.6 million.
The gross merchandise value rose 15 percent to $257.6 million in the quarter and was trending up over 30 percent through the beginning of March. In the month after shelter-in-place directives took hold in the Bay area on March 17, the company’s GMV fell by 40 to 45 percent. However, those trends improved modestly over the past couple weeks.
The company had to temporarily close its Brisbane, Calif., operations and make do with a reduced workforce in its New Jersey facilities.
But the logjam is starting to open. In a letter to investors, Wainwright and chief financial officer Matt Gustke noted: “Our four warehouses are all currently open, but operate in a significantly reduced capacity. Operations in our warehouse in Brisbane, Calif., are severely limited by local mandates to a small fraction of the more than 460 people we employed there prior to COVID-19. In New Jersey, our three other warehouses are also limited due to social distancing and state-mandated curfews that required us to suspend our evening shift. We are optimistic that trends will improve as shelter-in-place restrictions are relaxed and we are able to return to higher levels of staffing — at which point we’ll focus more marketing resources to drive supply.”
Like other companies in the industry, The RealReal cut operating expenses and focused on shoring up its balance sheet. The company cut its headcount by 10 percent, furloughed another 15 percent of its workforce, renegotiated vendor contracts, deferred some capital investments and more. At the end of the quarter, the company had a $303.2 million financial cushion in cash, cash equivalents and short-term investments.
The RealReal noted that its traffic trends “increased modestly” on a year-over-year basis last month even as advertising spending was cut by two-thirds while its four-day sell-through level rebounded to pre-COVID-19 levels.
Wainwright and Gustke noted: “Throughout the pandemic, supply trends have remained healthy, with supply growth trending slightly higher in the weeks since mid-March. The key for us is the ability to operate at reasonable levels while continuing to ensure the health and safety of our employees. We have consistently held ourselves to very high standards to protect our employees and help flatten the curve.”
During the crisis, The RealReal has pivoted and is getting some traction with new approaches.
“While social distancing prevents in-person White Glove appointments, we have increased focus on the digital experience,” Wainwright and Gustke said. “ We’ve turned to virtual appointments to continue delivering personalized consignment consultations and support people monetizing the assets in their homes during these uncertain times. We have conducted thousands of virtual appointments since launching the service, which is delivering comparable per-consignment results versus in-home appointments.”