Revolve and Shay Mitchell Pool Party

Revolve has been a test case in fashion for many different reasons in its 15 years.

The e-commerce site relied on influencers before Instagram was a digital glimmer. It started out with a sophisticated approach to using data that traditional retailers have only recently started to grasp. 

And now, the company is out in front again, making its bid for an initial public offering just as the market is trying to shake off a serious case of the jitters.

That timing has put the company under the glare of the fashion spotlight.

If it does successfully go public, and the price and the market’s initial reaction are strong, others waiting in the wings might follow. On the other hand, if Revolve, which declined to comment for this story, has to change course and stay private, that also will reverberate across the industry.

Regardless of what happens with the IPO, Revolve can be expected to continue to press its digital advantage, which includes a network of about 5,000 influencers who help sell its products and each month attract 7.3 million unique visitors, most of them Millennials.

“They have their pulse and the loyalty of the Millennial-oriented brands and customers,” said Kelsey Groome, managing director at Traub, an advisory firm.

The company’s rapid growth is credited to its founders — Mike Karanikolas and Michael Mente — who were enmeshed in the tech world before they launched Revolve. The duo’s foresight of tapping into data to predict what’s trending and leveraging that information to personalize the experience for individual shoppers is what makes them stand out.

“This is something that the market can definitely value,” said Andrea Szasz, retail and apparel principal at A.T. Kearney, a consulting firm. “They have the ability to really get to the right customers and get the customers the right products.”

The company revealed its plans to go public on Sept. 28 and expects the offering will generate at least $100 million for selling shareholders. 

The company boasts that sales grew 28 percent last year to $399.6 million. In addition, net income more than doubled, from $2.4 million to $5 million between 2016 and 2017.

With Revolve, the trend of mixing fashion with technology seems to be growing. In September, luxury, e-commerce retailer Farfetch went public. Stitch Fix, the online subscription and personal shopping platform, went public late last year.

Given the volatility in the market right now, with consumer worried about everything from interest rates to luxury spending in China, knowing just when to make a move could be everything. 

“How do you time an IPO given the current volatility in the market? That may be factoring into the decision-making,” Groome said. 

Given the stops and starts of the past few weeks, 2018 might be one of the most volatile years in the market since the financial crisis.  

To sustain Revolve’s rapid growth amid a risky open market, the company will have to continue innovating and recognizing trends before the competition. 

“It potentially has to sustain the believability of their strategy by creating, by basically having a story to support that growth,” Groome said. “Based on whether this potential is seen or not seen by the market, then obviously, their value in the future is going to depend on that new ability that is still not demonstrated.”

Revolve is backed by private equity firm TSG Consumer Partners, which has had a stake in the company since 2012. 

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