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The RealReal will lay off 230 employees, close stores
The resale platform has struggled with profitability.
The RealReal is joining the ranks of ecommerce platforms making significant cuts.
The luxury resale marketplace announced in an SEC filing on Thursday that it will lay off 230 people, or 7% of its workforce. The bulk of the job cuts are expected in the first quarter.
The company is also reducing its real estate footprint. It will close flagship stores in San Francisco and Chicago, as well as two neighborhood stores in Atlanta and Austin. Luxury consignment offices will close in Miami and D.C. The company will also exit co-located logistics hubs, and reduce its footprint at offices in New York and San Francisco.
“The company will continue to evaluate its real estate presence as it deems appropriate to create efficiencies and to address trends in the marketplace and macroeconomic factors,” the SEC filing states.
The news comes after a year of change at the 11-year-old RealReal. Founder Julie Wainwright left the company in June, and successor John Koryl was hired in January.
The company has continued to post impressive sales growth, as it helps to power a wave of demand for digitally-powered resale from consumers who are more comfortable with secondhand goods, and seeking out circularity in the face of climate change..
But the company has struggled with profitability. It recorded losses of $151.2 million in the current year, said GlobalData, which was only slightly better than the year before.
“Today’s job cuts and the closure of some physical locations in the form of stores and consignment offices are a recognition of the growing external challenges and that tougher action is needed to balance the books,” said GlobalData Managing Director Neil Saunders. “Riding the wave of high growth in resale is no longer enough to satisfy some investors who want to see that revenue growth will eventually lead to profits.”
Saunders cautioned that these actions alone may not be enough to move the company into the black, and “further steps may need to be taken across the year ahead.”
The RealReal follows a number of ecommerce platforms conducting layoffs to start the year in the midst of a wider pullback in tech, and reports of softer consumer demand. Amazon, BigCommerce, Wayfair and eBay are all among the companies reducing headcount.
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This Week in Commerce: Nike earnings, Fed rate decision
Check out the agenda for March 20-24.
Welcome to a new week. Earnings offer a bellwether for the consumer economy this week, as key brands like Nike and General Mills will report results. Elsewhere, all eyes will be on the Federal Reserve as it announces its latest decision on interest rates.
Fed interest rate decision: The Federal Reserve Open Markets Committee announces its decision on whether and by how much to hike benchmark interest rates following its two-day meeting. The Fed has been hiking interest rates rapidly in an effort to bring down 40-year-high inflation, but slowed the pace at the February meeting with a 0.25% increase. (March 22, 2 p.m.)
Durable goods orders: The U.S. Commerce Department releases data on orders from manufacturers for goods that are designed to last more than three years. This is considered an indicator of business activity. In January, orders dropped at the steepest rate since April 2020. (March 24, 8:30 a.m.)
Monday, March 20: Boxed, Foot Locker
Tuesday, March 21: Nike, GameStop
Wednesday, March 22: Petco, Chewy
Thursday, March 23: General Mills, Express