Reformation put a fashionable foot forward on Wall Street as the Los Angeles women’s brand tests just how far it can scale its sustainable messaging.
The company priced its initial public offering at $15 per share and closed about flat on Thursday, when it first began trading on the New York Stock Exchange under the ticker REF.
The question now for the company, launched in 2009 as a single store selling vintage, is what the IPO will mean when it comes to its store count and wholesale business.
“Today, we have a foundation that is ready to scale,” CEO Hali Borenstein told CNBC.
The company’s leaning heavily on its direct-to-consumer background and its tech-heavy stores to sell the story to investors, while pushing its sustainable ethos to consumers.
Net revenue last year was $507.1 million, according to a Securities & Exchange Commission filing. Most of that business, about 90 percent, is generated through the direct channel, which includes the website and 70 stores.
Borenstein and the company’s vision for growth is broad.
Reformation said in its SEC filing its plans include scaling wholesale, e-commerce, categories and international markets to achieve the lofty goal of “building a once-in-a-generation type brand.”
A big part of the company’s story are its Retail X stores. That’s the name given to its showroom model, which lets customers build out their dressing rooms with a touchscreen or their phones. Reformation said in its SEC filing the Retail X stores have average order values that are 8.5 percent higher than those without the technology.
There’s also the company’s use of artificial intelligence to merchandise. The company does small manufacturing runs of products to test on its site before scaling production.
A Point of Comparison
The fashion tech story brings to mind the IPO of Revolve Group in 2019, which soared nearly 90 percent in its trading debut. The company, which leveraged technology with digital marketing savvy to grow, priced its shares at $18 and raised $212 million in its IPO.
To be clear, the two companies are not an apples-to-apples comparison given Revolve is a multi-branded retailer, but both are after the contemporary consumer.
Revolve, which is now an over $1 billion business, has continued to turn heads by bucking the luxury downturn. It also remains a digital marketing machine that’s now leveraging artificial intelligence for merchandising among other things.
Notably, in March, the company announced the launch of Revolve Los Angeles. It marked the first time it was placing its name on an apparel collection and is indicative of where the company’s now headed: Playing up its own brand after years of being the platform for other labels.
If successful, it could very well prove to be a competitor to Reformation, but with a very strong backing in the more mature Revolve platform.
The question for Reformation is whether its sustainable messaging will be enough of a differentiator to continue to drive growth and, now as a public company, satisfy investors each quarter.
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