Luxury Reseller The RealReal Rises After $300 Million IPO
The company, founded by Chief Executive Officer Wainwright, makes it easier sell and buy used luxury items.
(Bloomberg) -- Online luxury reseller The RealReal Inc. rose 45% in its first day of trading after a $300 million initial public offering.
The RealReal’s shares, after rising as much as 50%, closed up at $28.90 in New York trading Friday, giving the company a market value of about $2.39 billion. The RealReal sold 15 million shares for $20 each on Thursday after marketing them for $17 to $19.
The company, founded by Chief Executive Officer Julie Wainwright, makes it easier sell and buy used luxury items such as clothing, accessories and jewelry on consignment by providing a platform for transactions and verifying that the goods are authentic.
Shoppers, especially millennials, are thinking more about sustainability and what happens to their clothes,” Wainwright said in an interview.
“It was like a drumbeat when we started,” said Wainwright. “Now it may not be the first reason they buy, but it’s the second.”
Internet-based apparel resellers like The RealReal, ThredUp Inc. and Poshmark Inc. have emerged as trendy alternatives to the secondhand clothing market. The RealReal focuses on luxury apparel items from designers like Hermes and Louis Vuitton, catering to the high-end fashion market, while ThredUp and Poshmark feature lower-priced items.
Used clothing, footwear and accessories represent a $10 billion market in the U.S., according to data from market research firm IBISWorld Pty Ltd. Interest from young, sustainability conscious shoppers has been a boon for the industry, which the firm forecasts will grow around 1.6% a year through 2024.
All this has made old clothing a magnet for investment. Venture capital has poured in, with more than $1.1 billion dropped into used-clothing operations over the past several years, according to data compiled by Bloomberg.
Venture Funding
That included more than $350 million in funding for The RealReal and about $130 million for ThredUp. French startup Vestiaire Collective raised $45 million in June to fuel international growth, bringing its total funds to almost $200 million.
The RealReal now has two brick-and-mortar stores in Manhattan and one in Los Angeles that collect as well as sell goods.
The San Francisco-based company plans to open more stores this year and beyond and may add to its 11 consignment locations, where customers bring in goods to be evaluated and potentially resold, Wainwright said.
While the market is intrigued by its growth, RealReal has yet to make a profit. The company posted a loss of $23 million on revenue of $69 million in the first quarter, compared with a net loss of $14 million on revenue of about $46 million for the same period last year. For all of 2018, it lost $76 million on revenue of $207 million, according to its filings with the U.S. Securities and Exchange Commission.
The offering was led by Credit Suisse Group AG, Bank of America Corp. and UBS Group AG, according to the filing. RealReal trades on the Nasdaq Global Select Market under the symbol REAL.
To contact the reporters on this story: Michael Hytha in San Francisco at mhytha@bloomberg.net;Olivia Rockeman in New York at orockeman1@bloomberg.net;Kim Bhasin in New York at kbhasin4@bloomberg.net
To contact the editors responsible for this story: Liana Baker at lbaker75@bloomberg.net, ;Anne Riley Moffat at ariley17@bloomberg.net, Michael Hytha, Matthew Monks
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