John Koryl is still settling in as The RealReal Inc.’s chief executive officer, but he’s come in with a clear mission — to make the company profitable.
And while he pointed to the company’s many strengths — its digital-first approach and sustainability story — he knows it won’t be quick and easy.
“I see a bright future for the business,” Koryl told analysts on a conference call after the company revealed better-than-expected fourth-quarter results. “As we all know, the company’s valuation is under pressure at the moment and achieving profitability is the company’s focus.”
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While RealReal’s stock approached $29 after its 2019 IPO, shares closed at $1.35 on Tuesday, for a market capitalization of $132 million. The quarterly update helped some, pushing the stock up 4.4 percent to $1.41 in after-hours trading, but there’s clearly a way to go still.
“I have no illusions that The RealReal’s path to profitability will be achieved overnight or with only minimal effort,” Koryl said. “Rather, these types of accomplishments take both time and energy.”
Koryl said he was optimistic about the company’s prospects and noted that he has the experience to turn the company around with a 30-year career “finding efficiencies and driving profitable growth at e-commerce businesses.”
Most recently, he led Canadian Tire’s online business through the pandemic. Before that he was president of stores and online of Neiman Marcus Direct, where he and the team used new marketing vehicles, tweaks to the site experience and omnichannel efficiencies to drive growth.
“We balanced growth with profitability during this period, focusing on marketing to the right customers delivering them the right experience, and doing so in the most efficient way possible,” Koryl said of his time at Neiman Marcus. “This takes lots of testing and quickly scaling small wins to produce significant results.”
He has his work cut out for him at RealReal.
RealReal’s net losses for the quarter narrowed to $39 million from $52 million a year earlier. Adjusted earnings per share tallied 29 cents, 6 cents better than the 35 cent-deficit analysts projected on average.
Revenues for the quarter ended Dec. 31 rose 10 percent to $160 million as gross merchandise volume rose 13 percent to $493 million.
The company is already in the midst of a flurry of changes to help boost results, from changing its consignor commission structure and cutting costs to optimizing pricing and pursuing new revenue streams.
This year, the company laid off about 230 employees, or 7 percent of its workforce, and revealed plans to close flagships in San Francisco and Chicago as well as two neighborhood stores and two consignment offices.
RealReal has cash and equivalents of $294 million on the books and has been operating more efficiently, but still has a way to go before breaking even.
Adjusted losses before interest, taxes, depreciation and amortization for the year narrowed to $112.4 million, or 18.6 percent of revenues, better than the $126.9 million, or 27.1 percent of revenues, registered in 2021.
RealReal expects to post adjusted EBITDA on a full-year basis in 2024, but is waiting until next quarter to give projections for 2023 beyond the current quarter to give Koryl more time to set his plan.
In the first quarter, the company is expecting adjusted losses before interest, taxes, depreciation and amortization of $31 million to $35 million on revenues of $135 million to $145 million.