Revolve Group, Inc. has provided a business update in response to the impact of the COVID-19 outbreak, which has severely affected consumer spending across many sectors of the global economy. Given the heightened uncertainty resulting from the COVID-19 pandemic, Revolve is withdrawing its previous financial guidance issued on February 25, 2020.
Initially Strong Q1 2020 Performance in January and February Offset by COVID-19 Impact
REVOLVE’s performance in the first quarter of 2020 began strong with net sales increasing more than 20% year-over-year for January and February 2020 combined. This strong trend continued into the first week of March. However, the sales trend meaningfully changed starting in the second week of March coincident with the escalation of the COVID-19 outbreak in the United States and elsewhere, with significant year-over-year sales declines in recent days. REVOLVE also anticipates that overall consumer demand in the coming months will be impacted by recently enacted COVID-19 requirements for social distancing, which have resulted in the postponement or cancellation of several REVOLVE brand marketing events including the REVOLVE Festival.
Financial Strength to Withstand Downturn: Cash on Balance Sheet Grew to $85 Million as of February 29, 2020 Compared to $65 Million as of December 31, 2019
As of February 29, 2020, Revolve had a strong balance sheet with approximately $85 million in net cash and equivalents. Revolve’s net cash position as of February 29, 2020 reflects an increase of approximately $20 million from $65 million as of December 31, 2019, primarily driven by operating cash flows. REVOLVE’s financial condition is also bolstered by a $75 million line of credit. Given the uncertain environment and out of an abundance of caution, REVOLVE elected to draw down $30 million in borrowings from this line of credit on March 19, 2020, further strengthening our current cash position.
“Growing REVOLVE for the past 17 years has brought countless ups and downs, yet dealing with the rapidly evolving impact of COVID-19 is truly unprecedented,” said Mike Karanikolas, Co-CEO and co-founder of Revolve. “Amidst all the uncertainty, we are staying laser focused on ensuring the safety of our employees while continuing to support our valued customers. Our balance sheet strength, capital efficiency and online business model position us to withstand a period of economic uncertainty and, we believe, come out stronger on the other end.”
“We are confident in our ability to navigate the rapidly changing consumer landscape and as such, Mike and I recently personally invested more than $2.5 million (on a combined basis) to purchase Revolve shares, adding to our majority ownership stake in the business,” added Michael Mente, Co-CEO and co-founder of Revolve.
Revolve continues to monitor the development of COVID-19 and the situation remains fluid. As of the date of this release, Revolve’s e-Commerce websites are fully operational, supported by its fulfillment center in Cerritos, California that is operating with enhanced workflow and processes to safeguard the health of its warehouse employees. Revolve is prepared to comply with state, city and local guidelines that may be enacted in response to the COVID-19 precautions, including any temporary forced closure of the fulfillment center should more rigorous restrictions be implemented in Los Angeles County.
