(Bloomberg News) Luxury consignment retailer The RealReal Inc. cashed in on its initial public offering to the tune of $300 million Thursday, selling 15 million shares at $20 each. The company marketed the stocks from $17-$19.
The RealReal, founded by CEO Julie Wainwright, makes it easier to sell and buy used luxury items such as clothing, accessories and jewelry on consignment by providing a platform for transactions and verifying that the goods are authentic.
Internet-based apparel resellers like The RealReal, No. 182 in the Internet Retailer 2019 Top 1000, ThredUp Inc. (No. 746) and marketplace Poshmark Inc. have emerged as trendy alternatives to the second-hand clothing market. The RealReal focuses on luxury apparel items from designers like Hermes and Louis Vuitton, catering to the high-end fashion market, while ThredUp and Poshmark feature lower-priced items.
Used clothing, footwear and accessories represent a $10 billion market in the U.S., according to data from market research firm IBISWorld Pty Ltd. Interest from young, sustainability-conscious shoppers has been a boon for the industry, which the firm forecasts will grow around 1.6% a year through 2024.
All this has made old clothing a magnet for investment. Venture capital has poured in, with more than $1.1 billion dropped into used-clothing operations over the past several years, according to data compiled by Bloomberg.
Venture funding
That included more than $350 million in funding for The RealReal and about $130 million for ThredUp. French startup Vestiaire Collective raised $45 million in June to fuel international growth, bringing its total funds to almost $200 million.
The company sells online at TheRealReal.com and now has two bricks-and-mortar stores in Manhattan and one in Los Angeles that collect as well as sell goods.
While the market is intrigued by its growth, RealReal has yet to make a profit. The company posted a loss of $23 million on revenue of $69 million in the first quarter, compared with a net loss of $14 million on revenue of about $46 million for the same period last year. For all of 2018, it lost $76 million on revenue of $207 million, according to its filings with the U.S. Securities and Exchange Commission.
The offering was led by Credit Suisse Group AG, Bank of America Corp. and UBS Group AG, according to the filing.
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