The RealReal expects 15% rise in Q1 GMV, announces job cuts and furloughs
San Francisco-based online luxury fashion marketplace The RealReal announced its preliminary first-quarter results on Tuesday, reporting an expected rise of 15% in gross merchandise volume (GMV) and revealing a range of measures being implemented to deal with the economic effects of the ongoing Covid-19 crisis.
For the first quarter ended March 31, 2020, the company expects GMV to total $258 million. In early March, GMV was experiencing year-over-year growth of more than 30%, which reduced to around 12% in the second week of the month.
Since the introduction of shelter-in-place directives in response to the coronavirus pandemic, however, GMV has plummeted, seeing a year-over-year decline of between 40% and 45% in the period starting March 17 and running into early April.
The platform expects its first-quarter net loss to be in the range of $39.9 million to $38.9 million, compared to a loss of $23.2 million in the prior-year period.
Commenting on Covid-19 in a release, The RealReal CFO Matt Gustke commented, “this unprecedented crisis has significantly impacted our ability to operate at previously planned levels, stemming primarily from limited warehouse operations.”
Having already temporarily closed its stores and consignment offices and suspended in-person consignment appointments due to the pandemic, the company recently took steps to preserve its liquidity.
The platform has reduced its total headcount by around 10% and cut expenses related to company payroll by approximately 15%. Further to this, The RealReal has furloughed around 15% of employees working in its e-commerce centers, retail stores, luxury consignment offices, sales organization and HQ.
The company has also cut executive salaries and implemented a hiring freeze and is working to reduce marketing investments and discretionary investments and renegotiate vendor contracts, among other cost-cutting measures.
Thanks to these initiatives, The RealReal is hoping to achieve operating expense reductions of over $70 million and capital expenditure reductions of around $15 million in 2020.
“With these actions and approximately $303 million of cash, cash equivalents and short-term investments on the balance sheet at the end of March, we believe we are well positioned to rebound strongly and fuel growth once the economy stabilizes, and we believe we are sufficiently capitalized to reach profitability,” explained Gustke.
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