ThredUp continues to lure new shoppers to its resale platform, but has yet to crack the code on how to make it a profitable business.
The Oakland, Calif.-based resale company reported quarterly earnings Monday after the market closed, revealing top-line revenue growth and increased customer engagement while also widening its losses.
But James Reinhart, cofounder and chief executive officer of ThredUp said there are bright spots on the horizon.
“We’re thrilled about the progress we’re making in the European market, as well as the growing roster of brands and retailers we’re supporting through our RaaS offering,” he said in a statement. “By continuing to invest in our global infrastructure, we’re confident that we’re strengthening our position in the growing resale market and making progress toward building a generation-defining company that changes the way the world shops and ushers in a new era of sustainable shopping.
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“We kicked off 2022 with another quarter of strong financial performance, demonstrating the ongoing competitive advantages we’ve developed in our supply chain,” Reinhart added.
The cofounder told analysts during Monday evening’s conference call that categories like cocktail dresses and heels were up 50 percent during the quarter, year-over-year, while warm-weather essentials, including sandals, swimwear and sunglasses, grew 80 percent during the same timeframe.
Another indication of upward momentum is ThredUp’s active buyers, which increased 33 percent to 1.7 million during the quarter, and orders, which grew 45 percent to 1.6 million, year-over-year.
Still, investors seem wary. Shares of ThredUp, which are down more than 70 percent year-over-year, closed down 13.42 percent Monday to $5.42 apiece. The stock continued to fall by close to 10 percent during Monday’s after-hours trading session.
Reinhart acknowledged a steady stream of headwinds currently impacting the entire retail industry, including inflation, rising labor costs, increased gas prices, the war in Ukraine and continued supply chain woes.
“There is much we cannot control in this environment,” he said on the call. “And there are just a multiple of disruptive factors at play, squeezing consumers in a number of ways. But we view these issues as transitory.”
One headwind includes an estimated increased freight cost of $9 million — up from $6 million — through the end of the year.
During the most recent quarter, which ended March 31, total revenues grew 31 percent to $72.6 million, up from $55.6 million a year ago. But ThredUp also widened its losses to $20.7 million, compared with losses of $16.2 million during 2021’s first quarter.
The firm is anticipating its current quarter revenues to be between $75 million and $77 million, with adjusted EBITDA margin loss in the range of 19 percent and 17 percent. For the full fiscal year, the company expects revenues to be between $315 million and $325 million, with an adjusted EBITDA margin loss in the range of 16 percent and 14 percent.
The fashion platform ended the quarter with $68.5 million in cash and cash equivalents and $25.6 million in long-term debt.
ThredUp — which Reinhart describes as “a managed marketplace for secondhand clothing” — went public in March 2021. The company’s 2021 annual report, which was created in partnership with Global Data, estimated that total secondhand market, including resale and traditional thrifting, will be worth $77 billion by 2025. The company’s 2022 annual Resale report will be released next week.
While ThredUp has yet to prove itself profitable since it landed on the Nasdaq a little over a year ago, Reinhart told WWD that the entire resale industry “will grow regardless of the economic conditions. I think it’s just a question of, does it grow faster in certain types of conditions? Or slower? I wouldn’t say a recession is good for resale. But as consumers feel more constrained in their wallets, I do think resale is an area that helps them stretch their dollar. So we continue to invest pretty significantly in the business across infrastructure, technology and software to power what we think is going to be a massive category over time.
“Right now, certainly, you’re seeing a surge in travel,” Reinhart continued. “You might see some paring back of things like apparel, or home furnishings. But I think you’re going to find that once this surge in travel and experiences normalizes from the pandemic, I think you’ll start to see wallet share be in more of an equilibrium to the way it was pre-pandemic and I think in that environment resale will do quite well.”
The firm also works with other retailers, such as Walmart, Adidas and Madewell, to help those brands dive into resale by way of its RaaS business. Brands can engage with ThredUp in three main ways: cleanout, cashout or in its full-service resale shop.
Reinhart said ThredUp, which currently sells about 35,000 brands across its platform, will have partnered with about 40 brands by way of RaaS by the end of the year, and even more over time.
“There’s a lot of brands out there that we think will be good brands for resale,” he said. “My expectation is that it’s not 40 brands [over time]. It’s probably hundreds, if not thousands, of brands over the years. Ultimately almost every brand is going to have a resale strategy, or resale experience, over the next five to seven years and I think ThredUp is well-positioned to power that.”