Days after making a splash on the New York Fashion Week runway, fashion resale firm ThredUp is following on the success of Poshmark and The RealReal with an initial public offering of its own after confidentially filing plans last fall.
ThredUp on Wednesday officially filed its registration statement with the Securities and Exchange Commission regarding its intent to go public. The filing did not disclose a price range for the shares to be offered. It did estimate a raise of $100 million, but that often is used as a placeholder to determine the registration fee. It will have two classes of common stock, Class A and Class B. The dual class structure ensures that voting control is in the hands of stockholders prior to the IPO, and includes directors, executives and affiliates.
The registration statement also said the Bay Area company plans to allocate $500,000 from the net proceeds resulting from the IPO start The Circular Fashion Policy Arm, focusing on environmental policy. “The mission of this function will be to curb the disposable fashion crisis by advocating for apparel reuse through the development of campaigns, initiatives and research that regulate fashion waste and incentivize circularity,” the SEC filing said.
Shares of ThredUp will trade on the Nasdaq Global Select Market exchange under the symbol “TDUP.”
For the year ended Dec. 31, 2020, the company widened its net loss to $47.9 million, or $4.14 a diluted share on a 14 percent gain in total revenue to $186.0 million. Total revenue included $138.1 million for consignments and $47.9 million for product sales. That compares with a net loss of $38.2 million, or $3.72, in 2019 on total revenue of $163.8 million. In comparison, the net loss in 2018 was $34.2 million, or $3.41 a diluted share, on total revenue of $129.6 million.
ThredUp said that in mid-2019, it shifted to focus primarily on consignment sales.
The company, which was founded in 2009, said its marketplace is one of the world’s largest resale platforms for women’s and kids’ apparel, shoes and accessories and that it modernizes resale by creating a smarter way to shop and sell secondhand items. Highlights of its operations include a 69 percent gross margin rate as of Dec. 31, 2020, 100 million unique items processed to date in distribution centers holding 5.5 million unique items, 80 percent of orders from repeat buyers, 77 percent of supply from repeat sellers, and saving consumers $3.3 billion based on estimated retail prices if they had shopped new. The resale platform promotes circularity for 21 brands and retailers, including Walmart and Abercrombie & Fitch. It also has saved 2 billion kilowatts of energy, 4.4 billion gallons of water, and displaces 1 billion pounds of carbon emissions, it said.
As of Dec. 31, 2020, ThredUp said it had 1.24 million active buyers and 428,000 active sellers. It ended the year with 3.96 million orders placed. The 100 million unique items processed to date since its inception were from 35,000 brands across 100 categories. Consumers pay up to 90 percent off the estimated retail price, it said.
“Sellers love ThredUp because we make it easy to clean out their closets and unlock value for themselves or for the charity of their choice while doing good for the planet. Sellers order a Clean Out Kit, fill it and return it to us using our prepaid label. We take it from there and do the work to make those items available for resale. In 2018, based on our success with consumers directly, we extended our platform to enable brands and retailers to participate in the resale economy,” the company said.
Buyers pay the resale firm up front when they purchase an item. For items held on consignment, sellers’ accounts are credited with their seller payout once the 14-day return window for buyers ends. “Our sellers then take an average of more than 60 days to use their funds, which results in a working capital dynamic that is favorable for our business given that the buyers pay us upon purchase,” ThredUp said.
The average order had four items and a value of $68.95, with the average revenue to ThredUp totaling $46.92. The average gross profit per order was $32.32, or a 69 percent gross margin rate.
The resale firm also said that buying secondhand is losing its stigma, citing a GlobalData survey last year that said 62 million women bought used products in 2029, up from 56 million in 2018.
Growth plans include expanding its operating platform, increase the selection of high-quality items, and expand its resale-as-a-service offering. The company is also looking to expand into new categories, as well as possibly enter new markets overseas.