Revolve made the most of its online presence during the pandemic a year ago — and kept pushing ahead in the second quarter this year with a big boost from its Forward luxury segment.
The party-ready company’s net income shot up to $31.5 million in the quarter — more than doubling year-ago earnings of $14.2 million, as well as comparable 2019 profits of $12.7 million.
Earnings per share of 42 cents blew past the 21 cents analysts expected.
Michael Karanikolas, cofounder and co-chief executive officer, underscored to analysts on a conference call that the company “meaningfully outpaced the record profitability we had delivered in the second quarter of 2020 at a time when Revolve uniquely reported very profitable results during the depths of COVID-19.”
Investors might have wanted even a little more as shares of the company fell 7.8 percent to $65.80 in after-hours trading, although that still left the stock easily up more than 300 percent over the past year.
Sales for the three months ended June 30 rose 60 percent to $228.6 million from $142.8 million a year ago. That also put sales last quarter well above the comparable 2019 sales of $161.9 million.
While Revolve is best known for its core business, focused on going-out looks for the young and internet obsessed, the firm’s Forward luxury business is gaining momentum and up more than 120 percent since the second quarter of 2019.
“A clear and measurable catalyst at Forward was the launch of our Forward loyalty program early in the second quarter that is fully integrated with Revolve,” Karanikolas said. “The amount of Forward customers coming directly from our existing Revolve customer base accelerated almost overnight after we launched the Forward loyalty program contributing strongly to our Forward segment growth in the second quarter.”
Currently fewer than 5 percent of Revolve’s active customers also shop on Forward — but the company is looking for more crossovers to build the luxury business, which sells looks from brands such as Versace, The Row, Balenciaga, Saint Laurent and, the latest addition, Tom Ford.
Michael Mente, cofounder and co-CEO, said: “While momentum has been building at Forward for some time, the second quarter was a breakout moment. Net sales increased a 151 percent year-over-year.…Forward also delivered record gross margins in the second quarter.”
“The strong results underscore Forward’s differentiated position in the market as a preferred destination for the next generation consumer seeking curated luxury offerings,” Mente said.
“Revolve has historically been focused on the discovery of trend driven ready-to-wear styles where Forward has been more heavily weighted toward the statement pieces in a wardrobe, shoes and handbags, categories that we know the Revolve customer loves and spends on,” he said. “We have only recently started to invest to fully leverage our broader platform and customer base to cross market the Revolve and Forward offerings.”
While the Revolve co-CEOs are clearly looking to the future, they are also living in the present.
Karanikolas said they were “closely monitoring the recent rise in COVID-19 cases around the world.”
“Relatedly the industrywide supply chain challenges had a progressively larger, albeit manageable impact in the last few months,” he said. “This came through in a decrease in the percentage of on-time deliveries from our suppliers and in an increase in our inbound shipping rates.”
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