Revolve Group posts drop in Q1 sales, profit

Revolve Group has reported a slight drop in sales in the first quarter and narrowing profits against a “very difficult prior-year comparison”.

The US fashion retailer, which has reported several record quarters in recent years, made sales of 279.6 million dollars in the three months to March 31, a drop of 1 percent from the prior year.

Sales at its Revolve segment fell 3 percent to 231.7 million dollars, which was partially offset by a 5 percent increase in sales at its Fwrd segment to 48 million dollars.

Domestic sales dropped 5 percent while international sales were up 16 percent.

Despite the year-on-year sales decrease, the company noted that its four-year compound annual growth rate was still up 19 percent since the first quarter of 2019.

Meanwhile, Q1 net income fell 37 percent to 14.2 million dollars, “a comparison that was impacted by the lower gross margin and an increase in operating expenses year-over-year, partially offset by an increase in other income due primarily to an insurance reimbursement”.

Looking at more recent trading, the company said sales since the end of April fell by around 7 percent “against a difficult prior-year comparison and amidst an increasingly uncertain macroeconomic environment highlighted by consumer inflationary pressures”.

Group co-founder and co-CEO Mike Karanikolas said in a statement: “We achieved excellent progress on rebalancing our inventory position and generated exceptional cash flow in the first quarter, despite a macroeconomic environment that became increasingly challenging as the quarter progressed, leading to deceleration in our net sales momentum.

“Supported by our strong profitability and cash flow that truly stand out within the fashion e-commerce sector, we are continuing to innovate and leverage new technologies while executing on several important growth, brand-building and efficiency initiatives that we believe will further strengthen our foundation for profitable growth over the long term.”