The buzz around fashion resale and rental has ebbed and flowed over the years, but the businesses themselves have been plugging away in the background, refining their approaches.
At least some of their efforts are starting to get noticed.
Shares of the luxury resale pioneer The RealReal Inc. jumped 444 percent to $10.93 last year — the industry’s strongest stock.
The trick will be carrying that momentum on.
It’s a job that falls to Rati Sahi Levesque, The RealReal’s first employee, who took charge as chief executive officer of the company in October.
“We believe there’s $200 billion in untapped value for luxury resale items in the U.S. alone,” Levesque told investors in November.
The RealReal CEO Rati Sahi Levesque.
Courtesy
Growing means getting more consumers to dig into their closets.
“We are a supply-constrained business,” Levesque said. “Essentially, what this means is that if we can procure the supply, we can sell it. Our lifetime sell-through rate is over 90 percent. Success in executing against our growth playbook relies on driving supply through three key areas: sales, marketing and our retail stores.”
The RealReal’s third-quarter gross merchandise volume grew 6 percent while revenues increased 11 percent to $148 million and adjusted earnings before interest, taxes, depreciation and amortization tallied $2.3 million — the company’s second quarter of positive EBITDA.
Levesque said the company is currently seeing both good supply and good demand as luxury shoppers look for value, boding well for resale’s run into 2025.
On the rental side, Nuuly has become a driver for parent company Urban Outfitters Inc., with sales up 53.9 percent to $265.9 million for the first nine months last year, boosted by a 50 increase in average active subscribers to 297,000.
Nuuly hit the accelerator in the fall with its largest marketing campaign, featuring talking Nuuly bags stressing that buying is normal, while renting is Nuuly.
“It is clear to us that we have built something special in Nuuly,” said David A. Hayne, the retailer’s chief technology officer and president of the rental division, in a call with investors.
“We have become the largest fashion rental company in the world with robust customer demand and subscriber growth and a profitable business model,” Hayne said. “We know we are expanding the overall rental market by winning first-time customers, as over two-thirds of our new subscribers report that they have never rented clothing prior to Nuuly.”
Rental also has a new name that seems set to make an impact.
Fashion and retail veteran Brendan Hoffman formed P180 with rental expert Christine Hunsicker from CaaStle and quickly made investments in Elyse Walker and Altuzarra last year.
The name is short for Project 180, signaling a desire to flip retail on its head — in part by taking goods that would have been marked down and putting them into a rental ecosystem.
“We’re going to help make sure that every piece of clothing that Altuzarra designs is monetized to the fullest extent possible,” Hunsicker told WWD when P180 invested in the brand in October. “We focus on the inventory and how to move it at the highest price possible. In theory, everybody wants to do that. But I think what we bring are some tools and technologies through [the rental platform] Borrow that actually help set the price a little bit higher, so that we’re monetizing the clothing at the highest rate possible. We want to make sure that we keep the returns down as much as possible, and that we keep the gross margin as high as possible.”
Hoffman and Hunsicker are out looking for more brands to invest in and work their magic on.
If that magic works as they want, rental could get buzzy again this year.
