In recent months, The RealReal has reported an average sales growth of 10% over 18 months, propelled by younger consumers' increasing preference for secondhand luxury goods over new items from traditional European brands.
This shifting consumer behavior has elevated resale platforms like The RealReal, positioning them as formidable competitors to established luxury retailers amid flat demand for new luxury products.
We'll explore how the accelerating consumer shift toward secondhand luxury is reshaping The RealReal's investment outlook and industry position.
To be a shareholder in The RealReal today, you need to believe that the preference for secondhand luxury, especially among younger generations, will keep fueling strong sales growth and allow the company to capitalize on a broader shift in consumer habits. The recent news of 10% average sales growth and the surge in resale demand reinforces the importance of consumer appetite as the main catalyst, but also highlights ongoing risks from reliance on maintaining high supply, as any slowdown in new consignors could have a material impact on the business.
Among recent announcements, the opening of another physical retail store in Summit, NJ speaks to The RealReal's efforts to bolster its inventory sources and expand local engagement, directly supporting the accelerating supply and demand trends discussed above. This move also ties into the company's broader strategy of leveraging omni-channel growth to create a recurring "flywheel" effect between new consignors and active buyers.
But on the other hand, investors should also be conscious of how much future revenue growth still depends on consistently unlocking fresh inventory from new and repeat sellers...
The RealReal's outlook projects $842.8 million revenue and $40.0 million earnings by 2028. This assumes a 9.8% annual revenue growth rate and a $75.4 million increase in earnings from the current -$35.4 million.
Exploring Other Perspectives
The Simply Wall St Community contributed one fair value estimate at US$10.83 for The RealReal. While views can differ widely, keep in mind that ongoing supply growth remains a critical pressure point shaping future results.