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ThredUp IPO Could Raise Up to $168 Million

ThredUp is officially going public.

The emerging secondhand apparel, footwear and accessories marketplace will list on the Nasdaq under the ticker symbol “TDUP” with an expected initial public offering (IPO) price at $12 to $14 per share, which would raise as much as $168 million.

The writing had been on the wall for ThredUp for months now, with the company confidentially filing an S-1 draft registration with the Securities and Exchange Commission (SEC) in October, before publicly filing its prospectus on March 3.

ThredUp is launching the IPO with 12 million shares of Class A common stock, and has granted the underwriters an option for a period of 30 days to purchase up to an additional 1.8 million shares.

The market seems primed for ThredUp’s debut. Resale in all forms is basking in investors’ appreciation for new business models—luxury consignment firm The Real Real went public back in June 2019 and now has a market cap of $2.1 billion, while $3.3 billion Poshmark, which operates a social commerce-driven peer-to-peer resale marketplace, filed in December. And although luxury fashion marketplace Vestiaire Collective hasn’t gone public yet, it just raised $216 million in funding led by French luxury titan Kering, nudging its value past $1 billion.

ThredUp reported $186 million revenue in 2020, up 14 percent from the $163.8 million in generated in 2019. Net losses also jumped to $47.9 million, or a $4.14 loss per diluted share, versus $38.2 million, or a $3.72 loss per share last year.

As of Dec. 31, ThredUp said it had 1.24 million active buyers, up 24 percent year over year, and 428,000 active sellers, down 4 percent year over year. While the company is trying to boost its number of new consumers, it appears once they are in, they keep buying, with 80 percent of orders coming from repeat buyers and 77 percent of supply coming from repeat sellers. Total orders were 3.96 million, up 27 percent from the 3.13 million in 2019.

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Overall, the marketplace sells products from 3,500 brands across 100 categories.

Since 2017, ThredUp has published an annual report with retail analytics firm GlobalData to measure the overall secondhand fashion market across resale and traditional thrift and donations.

In its public filing, ThredUp cited data points found by GlobalData to indicate that secondhand has become a mainstream way of buying, even grabbing share of wallet from fast-fashion brands, department stores and luxury brands alike. For one, GlobalData estimates that resale has grown 25 times faster than the retail clothing market on average over the past five years. Projected market growth for resale from 2019 to 2024, according to GlobalData, stands at 414 percent, compared to a 4 percent decline for all clothing retail.

Additionally, according to the GlobalData January 2020 Consumer Survey, 62 million women bought resale products in 2019, up from 56 million in 2018. Seventy percent of those surveyed said that they have or are open to shopping secondhand, while 82 percent said they already buy secondhand or are more open to resale purchases when finances are tighter in their households.

As part of its mission to extend the lifecycle of clothing, change the way consumers shop and usher in a more sustainable future for the fashion industry, the company offers “clean out kits” for consumers, which they can fill up with their items and drop off at a FedEx or UPS location using a prepaid label provided by ThredUp. When items sell, users can either cash out or earn shopping credit.

Throughout its growth, ThredUp leveraged its capabilities as a “resale-as-a-service” (RaaS) platform to partner with  21 apparel companies including Gap, Madewell, Reformation, J.C. Penney, Macy’s, Abercrombie & Fitch and Walmart. With the partnership, shoppers receive a gift certificate to shop with the retailer to clean out their closets and send their unwanted, good-condition clothes to stores that host ThredUp shop-in-shops.

ThredUp said in the March 3 registration statement that it planned to allocate $500,000 from the net proceeds resulting from the IPO to start The Circular Fashion Policy Arm, which will function 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.”

In total, ThredUp said in its filing that it has displaced 1 billion pounds of carbon emissions, saved 2 billion kilowatt hours (kWh) of energy and saved 4.4 billion gallons of water.

Additional net proceeds will be used for working capital and to fund the company’s growth strategies. A portion of the proceeds is also set aside in the event that ThredUp wants to acquire or invest in complementary businesses, products, services, technologies or other assets.

ThredUp also aims to increase its dynamic storage capacity from 5.5 million items to 6.5 million items by the end of 2021, as it increases the product density in its three existing distribution centers in Arizona, Pennsylvania and Georgia, its newest and largest facility.

“Consistent with our growth strategies, we will continue to invest in our operating platform by expanding and optimizing our distributed processing infrastructure and automation capabilities, including increasing automated distribution centers, and improving our proprietary software and systems and data science capabilities,” the company said in the filing.

Goldman Sachs, Morgan Stanley and Barclays are acting as the lead book-running managers for the offering. William Blair and Wells Fargo Securities are acting as book-running managers. KeyBanc Capital Markets, Needham & Company, Piper Sandler and Telsey Advisory Group are acting as co-managers.