The RealReal Reports Preliminary First Quarter Results

Details measures to reduce expenses by more than $70 million in 2020 in response to COVID-19

SAN FRANCISCO, April 14, 2020 (GLOBE NEWSWIRE) -- The RealReal (Nasdaq: REAL)—the world’s largest online marketplace for authenticated, consigned luxury goods—today announced preliminary results for the quarter ended March 31, 2020. Based on information available through April 13, Gross merchandise volume (GMV) is expected to be approximately $258 million, up 15% year over year. GAAP net loss is expected to be in the range of ($39.9)-($38.9) million, and Adjusted EBITDA loss is expected to be in the range of ($32.5)-($31.5) million. The RealReal ended the first quarter well capitalized with approximately $303 million in cash, cash equivalents and short-term investments.

GMV trends performed as expected through early March, with GMV growth in excess of 30% year over year. GMV growth in the second week of March was 12% year over year. However, limited operations in the company’s warehouses in accordance with shelter-in-place directives have significantly impacted GMV. Since March 17, when Bay Area shelter-in-place directives went into effect, and continuing into April, GMV has declined approximately 40%-45% year over year.

“This unprecedented crisis has significantly impacted our ability to operate at previously planned levels, stemming primarily from limited warehouse operations. In response, we undertook a comprehensive review of our operations, including stress test scenarios,” said Matt Gustke, CFO of The RealReal. “We took decisive action to reduce operating expenses and maximize liquidity. With these actions and approximately $303 million of cash, cash equivalents and short-term investments on the balance sheet at the end of March, we believe we are well positioned to rebound strongly and fuel growth once the economy stabilizes, and we believe we are sufficiently capitalized to reach profitability.” 

The RealReal recently implemented a number of measures to realign its cost structure, preserve liquidity and position itself for the long term including:

• Reduced marketing investments;
• Reduced overall headcount by approximately 10% and annual company payroll related expenses by approximately 15%, excluding the impact of furloughs; 
• Furloughed approximately 15% of total headcount including employees in its e-commerce centers, retail stores, Luxury Consignment Offices, sales organization and headquarters;
• Renegotiated certain vendor contracts and deferred other expense payments;
• Instituted a hiring freeze;
• Postponed the opening of its Chicago store;
• Deferred certain capital investments;
• Reduced discretionary investments across the business; and
• Reduced executive salaries.

These actions are intended to result in operating expense reductions of more than $70 million and capital expenditure reductions of approximately $15 million in 2020, compared to previously planned levels. They are designed to enable the company to support its employees through the pandemic and ensure the team is well positioned for a strong restart on the other side of this health crisis.