The RealReal Unveils New Savings Plan to Lower Operating Costs with Workforce Reduction and Store Closings.
February 17, 2023
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REALREAL ($NASDAQ:REAL): On Thursday, The RealReal, a luxury consignment company, announced a new cost-cutting plan in order to lower their operating costs. The RealReal’s plan is intended to help the company achieve sustainable long-term growth by optimizing their cost structure. According to the announcement, the reduced expenses will enable them to invest in initiatives that better serve their customers and strengthen the company’s overall business.
The RealReal has been faced with a difficult economic situation due to the pandemic, and this plan is the latest in a series of steps meant to ensure its resilience. They are hopeful that the cost savings and investments resulting from this plan will help them navigate the uncertain market conditions and ensure their future success.
Price History
The plan has so far been met with mostly negative media exposure. On Thursday, stock for the company opened at $1.7 and closed at $1.6, a drop of 9.6% from its previous closing price of $1.8. This decrease in stock prices reflects investor unease with the company’s new cost-saving measures. It remains to be seen how the company will be affected by these changes in the long run. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Realreal. More…
| Total Revenues | Net Income | Net Margin |
| 588.96 | -210.03 | -35.5% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Realreal. More…
| Operations | Investing | Financing |
| -114.02 | -35.93 | 5.58 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Realreal. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 634.42 | 775.67 | -1.44 |
Key Ratios Snapshot
Some of the financial key ratios for Realreal are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 27.7% | – | -33.2% |
| FCF Margin | ROE | ROA |
| -25.5% | 98.5% | -19.3% |
Analysis
At GoodWhale, we have done a deep dive into the fundamentals of REALREAL. According to our Star Chart analysis, the company is classified as a ‘cheetah’, meaning it has achieved high levels of revenue or earnings growth but is considered to be less stable due to the lower levels of profitability. In terms of its investor profile, REALREAL is strong in terms of growth opportunities and weak in terms of assets, dividends, and profitability. When considering the potential of REALREAL, it is important to note that it has a low health score of 2/10 considering its cashflows and debt. This means that the company is less likely to safely ride out any crisis without the risk of bankruptcy and may be more attractive to investors who are comfortable with taking on a higher level of risk for potentially greater rewards. More…
Peers
The RealReal Inc is a luxury consignment company that sells pre-owned designer items. The company competes with PChome Online Inc, Tapestry Inc, and Carvana Co. The RealReal Inc has a competitive advantage because it is the only luxury consignment company that is publicly traded. The company also has a competitive advantage because it has a brick-and-mortar store in addition to its online presence.
– PChome Online Inc ($TPEX:8044)
PChome Online Inc is a Taiwanese company that provides an online marketplace for consumers in Taiwan. The company has a market cap of 5.88B as of 2022 and a Return on Equity of 3.34%. PChome Online Inc operates an online marketplace that sells a wide variety of merchandise, including books, electronics, and home appliances. The company also provides a range of services, such as online payment and shipping.
– Tapestry Inc ($NYSE:TPR)
Tapestry, Inc., is an American luxury fashion holding company based in New York City. It was founded in 2016 as a result of the merger of Coach, Inc. and Kate Spade & Company. The company operates several major brands in the luxury fashion market, including Coach, Kate Spade, Stuart Weitzman, and Tapestry Collection.
Tapestry’s market capitalization is $7.57 billion as of 2022. The company’s return on equity is 28.67%. Tapestry is a luxury fashion holding company that operates several major brands, including Coach, Kate Spade, Stuart Weitzman, and Tapestry Collection.
– Carvana Co ($NYSE:CVNA)
Carvana Co is a company that operates an e-commerce platform for selling used cars. The company has a market cap of 1.94B as of 2022 and a return on equity of -183.76%. Carvana Co’s market cap is lower than the average for companies in the same industry, and its ROE is significantly negative. The company’s business model is not sustainable in the long term, and it is likely that Carvana Co will eventually go bankrupt.
Summary
The RealReal recently announced a new cost-saving strategy including workforce reduction and the closure of some stores. The media response has been largely negative, and the company’s stock price has suffered as a result. As investors analyze the implications of these measures, it is important to assess whether the anticipated savings from staff reductions and store closures outweigh their associated risks.
Additionally, one must evaluate any potential long-term effects on brand loyalty and customer acquisition costs. Finally, the impact on competitors and industry trends should be monitored to determine if The RealReal can remain competitive.
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