What we have is effectively a newsletter about insights or issues that become evident through following financial markets and there is leeway and freedom of methodology. There are in fact multitudinous trends. When valuing businesses that attempt to utilize them, it can be easiest to emphasize near-term years; rather than project a decade(s) into the future, which is typically regarded as essential.
There also can be tremendous dedication of resources to research. However, even if media is lousy at stock picking, it can make financial and economic matters known, such as declining shopping mall traffic and the struggles of brick and mortar stores. So, without any presentation of data that is both rigorous and expensive to obtain, let’s surmise that some commercial properties are struggling as their tenants fail to continue relationships with customers. The bankruptcy of shopping mall anchor Sears is readily at mind; who else, there’s Barnes & Noble, JC Penny and Limited Brands. Their ordeals are associated with a prevalence of online shopping. Amazon.com, as repeatedly cited by Democratic presidential candidate Andrew Yang, among others, is sometimes considered responsible.
Obviously the intent here is not to try to sell typewriter ribbons or magazines with subscription cards that fall out when thumbing through them. That does not mean there is overwhelming enthusiasm toward innovation or cutting edge new technology–including buggy software platforms or automated customer service with backstop representatives outsourced to a different country–but it can be interesting or exciting. Further, companies that are bringing in the vanguard ways of doing things, as Revolve Group (RVLV) appears to be, tend to be ahead of their competitors and free of myriad problems incurred in a need to catch up.
Revolve is a retailer of women’s clothing and merits attention because it is not only digitized but popular via handheld devices and makes use of influencers rather than traditional models. Female apparel is important; data is not available, but it can actually be shown as an aspect of the economy. The combination of the industry and innovation could yield a winning stock; it probably will.
There are risks of course. Those risks are compounded by a lack of knowledge on the industry. Its share price is testing $20. It would be wonderful to have a great read on which way it should go from here.
Though the company reports that tariff impacts are a “Very low percent of the mix,” trade remains important. There appears to be an opportunity ahead of a scheduled Phase One trade deal with China that is scheduled for consummation this week. Also, there should be a seasonal uptick in the next few months.
Upon a few weeks’ reflection, here are some observations about Revovle:
There also can be tremendous dedication of resources to research. However, even if media is lousy at stock picking, it can make financial and economic matters known, such as declining shopping mall traffic and the struggles of brick and mortar stores. So, without any presentation of data that is both rigorous and expensive to obtain, let’s surmise that some commercial properties are struggling as their tenants fail to continue relationships with customers. The bankruptcy of shopping mall anchor Sears is readily at mind; who else, there’s Barnes & Noble, JC Penny and Limited Brands. Their ordeals are associated with a prevalence of online shopping. Amazon.com, as repeatedly cited by Democratic presidential candidate Andrew Yang, among others, is sometimes considered responsible.
Obviously the intent here is not to try to sell typewriter ribbons or magazines with subscription cards that fall out when thumbing through them. That does not mean there is overwhelming enthusiasm toward innovation or cutting edge new technology–including buggy software platforms or automated customer service with backstop representatives outsourced to a different country–but it can be interesting or exciting. Further, companies that are bringing in the vanguard ways of doing things, as Revolve Group (RVLV) appears to be, tend to be ahead of their competitors and free of myriad problems incurred in a need to catch up.
Revolve is a retailer of women’s clothing and merits attention because it is not only digitized but popular via handheld devices and makes use of influencers rather than traditional models. Female apparel is important; data is not available, but it can actually be shown as an aspect of the economy. The combination of the industry and innovation could yield a winning stock; it probably will.
There are risks of course. Those risks are compounded by a lack of knowledge on the industry. Its share price is testing $20. It would be wonderful to have a great read on which way it should go from here.
Though the company reports that tariff impacts are a “Very low percent of the mix,” trade remains important. There appears to be an opportunity ahead of a scheduled Phase One trade deal with China that is scheduled for consummation this week. Also, there should be a seasonal uptick in the next few months.
Upon a few weeks’ reflection, here are some observations about Revovle:
- May not have pricing power or brand name
- Customer item returns are probably important to business
- Management biographies are not inspiring–but neither was that of AutoZone’s (AZO) Bill Rhodes at first.
- Measures of performance need attention; there is no known “same store sales.” Repeat customer activity might be valuable.
- Sales are up 23%
- Active customers are up 33%
- However average order value keeps declining, and is lower by 1.8% since last year.
- Management claims successful collaborations with Aimee Song and Camila Coelho during the second quarter, and in October launched an exclusive owned brand collaboration with Draya Michele [all new names to me].
It continues to sound like a favorable situation. If you have a better understanding of influencer marketing, it could be for you. If Aimee Song, Camila Coelho and Draya Michele are all names that you need to look up, there could be questions.
While overall sales are growing at a rapid rate, including internationally in the United Kingdom, Australia, and western Europe, customers are not paying up for the Revolve brand.
Additionally, Revolve is not about taking advantage of deals on real estate that are associated with the struggles of traditional retail. Auto parts companies can do so as does Planet Fitness. Auto parts companies can be worthwhile when their shares are priced reasonably in consideration of consensus earnings estimates, or management’s guidance. Planet Fitness is growing incredibly fast, which might already be baked into the stock price (unless is is bought out). Though Revolve reports a profit, and also free cash flow, it is relatively expensive by these measures.
So, confidence is lacking here that an apparel business should command its high valuation. It could be the case. However, there is also a risk.
Revolve Marketing may present the future of women’s apparel. It evidently is not identified with models on the catwalk and collaborates with persons deemed trendy or popular in different ways. Thus, as its clothing is not currently an identifiable brand, any future indication that it is able to increase prices may signify that repeat customers are making bigger purchases–not just returning some items and keeping others. It does not appear to be the case currently. Other retailers are better-known and their stocks involve ownership of profitable storefronts that open advantageously in battered retail real estate markets. Revolve’s investors are paying up for technology and future ways of doing things, it is not clear that the company’s customers are also.