ThredUp says budget shoppers holding back in Q2 report

Resale service provider ThredUp reported strong year-over-year growth in its Q2 financial report, however noted that budget shoppers were holding back on spending as the economy continues to take a hit.

In its recent earnings call, CEO James Reinhart said that the company’s total Q2 revenue came out to 76.4 million dollars, at a 27 percent year-over-year growth.

Its network of 1.7 million active buyers and its 1.7 million orders additionally represented growth of 20 percent and 40 percent, respectively.

The company reported a gross margin of 68.9 percent and gross profit growth of 19 percent, with record gross margins in its US business of 74.2 percent.

Furthermore, ThredUp’s net loss was 28.4 million dollars, almost double that of its 14.4 million dollar net loss during the same period in 2021.

A notable trend highlighted by Reinhart was that of its premium shoppers trading up and budget shoppers trading down.

Within its deep discount subsegment of consumers, average order value (AOV) had seen a seven percent decline, while upscale shopper’s AOV had increased by 15 percent.

Additionally, its budget shoppers were trading down to items that are 24 percent less expensive, while upscale were doing the opposite.

Looking ahead, ThredUp is said it is planning to reach an adjusted EBITDA breakeven towards the end of 2023, with an expected revenue of 80 to 85 million dollars.

It added that it has taken steps to reduce expenses across certain departments as it looks to move towards profitability.

“We’re not a retailer or DTC ecommerce company. Unlike traditional retailers whose brand equity around pricing, inventory commitments, and fashion manufacturing lead-times can become a liability in a hyper-promotional and slowing macro environment, our consignment structure and flexible, responsive supply chain enable us to take minimal inventory risk,” commented Reinhart.

He continued: “We don’t set trends or have to bet on trends many quarters into the future, we can let the data drive our decision making. We think of every listed item in our marketplace as a snowflake - which means we have the flexibility to adjust our prices, seller payouts, processing cadence, recommendation algorithms and merchandising mix to adapt to the consumer environment.”

In terms of sell-through percentages YOY, compared with the same period in July, 2021, the platform noted that women’s workwear had continued to trend, with wool blazers up 59 percent and wool pants up 42 percent.

Additionally, partywear was also making a comeback, with the sell-through rate of cocktail dresses up 31 percent and heels up 20 percent.

Another trend spotted by ThredUp was that of outerwear purchases, which suggested that customers were transitioning to autumn clothing earlier than normal. Wool coats saw an increase of 51 percent, while leather jacket sell-through was up 31 percent.