Secondhand luxury platform The RealReal has announced it is anticipating a first quarter loss and is looking at measures to cut expenses by more than 70 million dollars including cutting or furloughing staff.
The San Francisco-based company said it expects its gross merchandise volume (GMV) for the three months to 31 March to grow 15 percent year-on-year to approximately 258 million dollars.
GMV had been trending up over 30 percent year-on-year until the second week of March, when it fell to growth of 12 percent. Since 17 March when Bay Area shelter-in-place directives went into effect, GMV has declined approximately 40 - 45 percent year-on-year.
The Real Real warns of job cuts amid COVID-19 losses
The company also said it has reduced its overall headcount of staff by approximately 10 percent and has furloughed approximately 15 percent of its staff working across its e-commerce centers, retail stores, luxury consignment offices, sales organization and headquarters.
The company expects its cost-cutting measures to result in operating expense reductions of more than 70 million dollars.
“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 The RealReal chief financial officer Matt Gustke in a statement.
“We took decisive action to reduce operating expenses and maximize liquidity. With these actions and approximately 303 million dollars 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.”
Photo credit: The RealReal, Facebook