Revolve Group revenues drop in the third quarter

Revolve Group, Inc. reported an increase in active customers by 52,000 during the third quarter of 2023, growing to 2,510,000 as of September 30, 2023, an increase of 12 percent year-over-year.

Net sales for the quarter were 257.6 million dollars, a decrease of 4 percent.

"A key highlight of the third quarter was surpassing 2.5 million active customers, an increase of 12 percent year-over-year, and over one million more active customers than the third quarter of 2019. While average spend per active customer has decreased year-over-year in this very challenging environment, we view this as a temporary dynamic that will normalise as the environment improves," said Revolve co-founder and co-CEO Michael Mente in a statement.

Highlights of Revolve Group’s Q3 results

The company added that gross profit for the third quarter was 133.2 million dollars, a decrease of 6 percent, gross margin was 51.7 percent, a decrease of 127 basis points.

Net income was 3.2 million dollars, a decrease of 73 percent, adjusted EBITDA was 9.5 million dollars, a decrease of 46 percent and diluted earnings per share (EPS) was 4 cents, a decrease of 75 percent.

"We achieved a key 2023 objective of rebalancing our inventory as the spread between our year-over-year inventory and sales trends was favourable in the third quarter for the first time in more than two years," added the company’s co-founder and co-CEO Mike Karanikolas.

Revolve brand segment net sales were 217.7 million dollars, a decrease of 2 percent and FWRD segment net sales were 39.9 million dollars, a decrease of 14 percent. Domestic net sales were 207.2 million dollars, down 5 percent, while international net sales were 50.4 million dollars, down 1 percent.

Revolve Group cuts 2023 guidance

The company said that net sales in October 2023 decreased by a low-single digit percentage amidst ongoing uncertainty in the macroeconomic and geopolitical environment that continues to pressure consumer spending on discretionary products.

For the year ahead, the company now projects gross margin in the range of 51.8 percent to 51.9 percent compared to previous outlook of between 52 to 52.5 percent.

For the fourth quarter, the company said, gross margin is expected to range between 51.7 percent to 52 percent.