The RealReal’s Losses Widened Even as GMV Expands

The RealReal Inc. is gaining some real resale momentum momentum — and testing out more categories — but still working on driving profits. 

Second-quarter net losses widened to $70.7 million at the company and included an $11 million charge for a legal settlement that is pending court approval and tied to a case alleging the RealReal misled investors on how it authenticates the luxury goods it markets. 

But even without the charge, net losses widened by more than $16 million from the $42.9 million logged a year ago. Adjusted losses of 50 cents a share came in a little worse than the 47 cent deficit Wall Street analyst had penciled in. 

But revenues for the three months ended June 30 jumped to $104.9 million from $57.3 million a year ago, when the first pandemic lockdowns. 

That represented a gross merchandise volume record of $350 million in the quarter. 

Julie Wainwright, founder, chief executive officer and chairperson, told analysts on a conference call: “We are pleased to report another quarter of strong growth driven by at-home consignment and our continued retail momentum. We achieved our highest numbers of both new and repeat consignors this quarter.”

GMV in the quarter marked a 91 percent increase from a year earlier and 53 percent rise from the sale period in 2019. 

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While the business is coming back to life after last year’s lockdowns, it’s clear the company is still growing and changing rapidly. 

During the second quarter, The RealReal resumed at-home concierge appointments, transitioned to its Phoenix authentication center and added stores in Austin, Dallas and Atlanta. 

“Q2 was a very busy quarter for us,” Wainwright said. 

Indeed, when KeyBanc analyst Edward Yruma asked on the call about tests in categories such as electronics and sporting goods, the CEO said the company’s total addressable market was growing. 

“It’s early, early days, so we’re not going to make any predictions, but we are going into the collectibles in particular, there were large categories in the outdoor [space],” Wainwright said. “We think of ourselves as a luxury lifestyle business. Our consignors were asking us to get into these categories. We researched it for a while, it sounds like it was actually going to be a net add to us. So we just started that in almost the third week of July. So it’s very, very new for us.”

Wall Street is keeping the pressure up on the company to keep pushing toward profitability — an effort made harder last quarter by the legal settlement. 

The RealReal said it filed “a stipulation to settle” a lawsuit that alleged it and certain top executives “violated federal securities laws by issuing false or misleading statements regarding certain of its financial and operating metrics and the company’s authentication processes.”

Investor Michael Sanders sued the company in November 2019, vying for class action status and claiming that the RealReal misled investors by saying it had a “rigorous authentication process” and pointed to a CNBC investigative report that found that not every item was authenticated by an expert. 


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