The RealReal to wind down beauty business amid streamlining efforts
The RealReal is winding down its beauty business to focus on its luxury consignment business amid an ongoing streamlining at the US resale giant.
“We’re prioritizing our efforts on growing our luxury consignment business,” a spokesperson told WWD.
“With that, we have been deemphasizing the direct side of our business, including our beauty category, which is a small piece of our marketplace.”
The spokesperson added that the company will “continue to sell through the existing inventory and sunset the category”.
It comes as many fashion businesses look to cut costs and refocus on their most profitable categories and operations against a backdrop of high inflation and economic uncertainty.
In February last year, The RealReal announced plans to cut 230 jobs - or 7 percent of its workforce - a stark U-turn on its previous plans to bulk up its staff in expectation of a late-pandemic surge in demand.
The company also announced at the time it would close two of its flagship stores in San Francisco and Chicago; two neighbourhood stores in Atlanta and Austin; two luxury consignment offices in Miami and Washington; and any co-located logistics hubs.
It also said it would reduce its office spaces in California, San Francisco, and New York.
That news came a month after The RealReal announced the appointment of new CEO John Koryl, who has been tasked with streamlining the company’s operations and steering it to profitability.
Signs of progress
In the fourth quarter ended December 31, The RealReal managed to narrow its net loss to 39 million dollars from 52 million dollars a year earlier.
That came as its gross merchandise value (GMV) increased 13 percent to 493 million dollars, and revenue rose 10 percent to 160 million dollars.
For the full year, the company’s net loss narrowed to 196 million dollars from 236 million dollars, as GMV increased 23 percent to 1.8 billion dollars, and revenue grew 29 percent to 603 million dollars.
Commenting on the results at the time, The RealReal finance chief Robert Julian said: “The fourth quarter results demonstrated the financial progress we have made throughout 2022.
“In particular, shrinking the unprofitable direct business and growing the profitable consignment business resulted in a 490-basis-point improvement in gross margin in the fourth quarter of 2022 compared to the fourth quarter of 2021.”