Revolve Group’s sales climbed 20% to $356 million in the quarter ended September 30, beating analysts’ expectations, according to Yahoo Finance. However, net income fell 27% to $15.5 million, as higher logistics costs weighed on profitability. Adjusted earnings before interest, taxes, depreciation and amortization declined 7% to $23.5 million.
Sales rose at both of the company’s divisions: Revolve generated $306.8 million, while Fwrd recorded $49.2 million. Revolve’s active customer count increased 18% to 3.2 million over the trailing 12 months, and orders grew 19%. Average order value, however, fell 5% to $292. The company attributed the decline primarily to initial sales of Grow-Good beauty products, which it said were offered at lower price points. Grow-Good launched in the spring as part of a joint venture with Cardi B.
Revolve co-founder and co-CEO Michael Karanikolas said the company’s sales and customer momentum stood out against softer trends elsewhere in the industry. He also said the return rate fell by more than two percentage points year over year, with category diversification among the factors behind the improvement. The company has reduced returns in eight of the past 10 quarters, he added.
Lower returns helped offset higher fuel surcharges in logistics, but did not prevent shipping costs from pressuring earnings. Revolve shares fell 4.8% to $20.50 in after-hours trading on Tuesday.
Marketing spending rose to $50.8 million, or 14.3% of sales, from $40.4 million, or 13.7%, a year earlier. The company said the increase supported performance and brand marketing, including growth initiatives for its Revolve Los Angeles label. Revolve plans to allocate 16.9% of sales to marketing in the fourth quarter.
Sources: WWD.