ThredUp Inc. Chief Executive James Reinhart says core categories for the secondhand e-commerce company like dresses and handbags will get a bump as the U.S. continues on the path to reopening post-COVID.
It’s just one of the areas of growth and improvement that is up ahead for the company.
Newly public, ThredUp announced its first quarterly earnings results this week. The company is already seeing dress sales rise as shoppers turn their attention to upcoming events.
Also read: ThredUp IPO: 5 Things to know about the secondhand e-commerce site.
“[W]e’re definitely seeing sales of things like loungewear and sweats and leggings and what you would categorize as stay-at-home categories decline[…] about 10% as a percent of sales since March,” Reinhart said on the earnings call, according to a FactSet transcript. “Whereas we’re seeing strong performance in dresses, mini-dresses are up more than 20%. You have formal dresses, as wedding season comes into focus, they’re up 15%.”
Government data released on Friday shows consumer interest in a wardrobe refresh after a year of living in casual gear. Sales of clothing and clothing accessories were up more than 700% during the month of April even as sales overall for U.S. retailers were flat.
See: Department-store shares soar after clothing sales jump more than 700% from April 2020
Also: Sales at U.S. retailers fall flat in April as stimulus boosts fades
upcoming 2021 Resale Report shows that 80% of U.S. consumers plan to update their closets, either by buying new clothes or getting rid of old ones. This will keep the pipeline of fresh merchandise headed to ThredUp pumping for some time to come.
“Given we estimate that there are potentially a one billion — that’s with a ‘B’ billion — Clean Out Kits out there in the U.S. every year and that we processed just a million last year, we are confident in a long-term supply opportunity for ThredUp,” Reinhart said on the call.
Sellers order a Clean Out Kit directly from ThredUp, fill it with items they’d like to sell or ultimately recycle, and send it back to ThredUp for processing.
Moreover, the company has cut the processing wait times on those kits by 50% to about eight weeks, heading toward a goal of two-to-three weeks by the end of the year.
Reinhart says growing interest from newcomers to secondhand shopping will also benefit ThredUp. According to the company’s 2020 Resale Report, the secondhand market is expected to reach $64 billion by 2024, up from $28 billion in 2019.
Also: Ralph Lauren is back in style and showing increased top-line potential
“What’s evolving is consumer sentiment around secondhand. We’ve been through the early adopter phase of those who were naturally inclined and shopped secondhand off line or were thrifters,” Reinhart told MarketWatch in an interview after the earnings report.
“Now those looking for value have discovered how resale can be a good option for them. We’re in the phase of the average consumer thinking about secondhand,” he said.
ThredUp reported late Thursday a first-quarter net loss of $16.2 million, or 86 cents per share, after a loss of $13.2 million, or $1.23 per share, the prior year. Revenue of $55.7 million was up from $48.3 million last year.
The FactSet consensus was for a loss of 32 cents per share and revenue of $48.4 million.
ThredUp guided for second-quarter revenue in the range of $53 million to $55 million, and full-year revenue in the range of $223 million to $229 million.
The FactSet consensus is for second-quarter revenue of $54.7 million, and full-year revenue of $227.4 million.
“ThredUp posted a strong first quarter as a public company, and we think it is well-positioned to take advantage of improving apparel demand,” wrote KeyBanc Capital Markets in a note.
“We believe that we are in the early innings of a powerful 12-to-18 month cycle in
apparel. ThredUp should benefit both on the supply side (clean out bag processing)
as well as from improving demand.”
KeyBanc rates ThredUp stock overweight with a $22 price target.
“With their first print since the IPO, ThredUp showed investors that the business is recovering faster than planned, margin dynamics are strong and the outlook is very optimistic (yet guidance remains conservative),” wrote Wells Fargo analysts in a note.
Don’t miss: This second-hand clothing platform teens are crazy about has just been valued at $4.2 billion
Wells Fargo analysts call resale the “next big ‘disruptor’ in retail.” Analysts rate ThredUp stock overweight with a $26 price target, up from $22 previously.
Not only is ThredUp making gains with consumers, CEO Reinhart says other brands and retailers are also seeing the value of resale broadly, and his company specifically.
“We’re continuing to make lots of progress with brands and retailers. We’re seeing sentiment that resale needs to be a part of the plan,” he told MarketWatch.
This week, ThredUp announced a partnership with Vera Bradley Inc.
in which Vera Bradley provides ThredUp’s Clean Out Kits to its customers. ThredUp has also established partnerships with Gap Inc.
Abercrombie & Fitch Inc.
and other retailers.
“Any retailer needs to be thinking about what they need to do in this category,” Reinhart said.
ThredUp stock has gained 21.3% over the last month while the S&P 500 index
is down 0.3% for the period.