By Dhirendra Tripathi
Investing.com – TheRealReal (NASDAQ:REAL) stock plunged more than 9% in Tuesday’s premarket trade as higher costs including those on marketing as well as legal expenses pulled the company’s June-quarter bottomline further into the red from last year.
Total revenue rose 83% from the year-ago June quarter to $104.91 million but that was overshadowed by a 78% increase in costs of revenue and a 63% jump in operating expenses including legal costs. The company also substantially invested in operations and technology.
At $11 million, costs for a legal settlement were 10.5% of the total revenue in the June quarter.
Though the company didn’t specify the legal case for the high settlement charges, it has been fighting allegations by Chanel that it misrepresented counterfeit goods as authentic products of the French luxury fashion house.
Chanel argued that TheRealReal’s resale of its products leads consumers into believing that it is affiliated with the online marketplace, an association that doesn’t exist.
As a result, TheRealReal’s net loss widened to $70.69 million from $42.99 million.
The company expended its offline footprint as its retail stores generated approximately 30% of new consignors in the June quarter.
The company now operates nine neighborhood stores and plans to open one or two more over the coming months.
The company booked its highest quarterly gross merchandise volume to date in the second quarter. GMV rose 91% year-on-year and 53% compared to the same period in 2019.
TheRealReal also achieved its highest quarterly additions of both new and repeat consignors to its marketplace to date. Gross profit per order Improved $9 sequentially to $94.
The RealReal Slips As Higher Costs, Legal Expenses Widen Loss
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