The Revolve Group, at 19, managed to surpass $1 billion in sales last year as the Los Angeles fashion company enters its 20th year in business.
The e-commerce company, which caters to Millennials and Generation Z, reported Thursday its fourth-quarter and full-year results. It lapped a pandemic year with growth its co-CEOs couldn’t help but tout in a call with analysts following the earnings release.
“It’s compelling to compare our growth trajectory during the three-year period to legacy retailers offering premium price points, including higher-end department stores, where reported revenue from some larger players has been flat to lower than pre-pandemic levels,” co-founder and co-Chief Executive Mike Karanikolas said during Thursday’s earnings call. “This comparison illustrates just how much the next generation of consumers is moving in our direction and how well our brands are connecting to our impactful and diversified marketing approach.”
Karanikolas added he and co-founder and co-CEO Michael Mente see “a very large opportunity” to take more share from legacy retailers to the tune of tens of billions of dollars in revenue.
Revolve ended the year with net sales of $1.1 billion, up 24 percent from the prior year. Net income fell 41 percent in 2022 to $58.7 million due to higher costs and more promotions in the fourth quarter.
The company ended the final quarter of the year with net sales up 8 percent to $259.2 million. Fourth-quarter net income spiked 73 percent to $7.9 million.
Digital Marketing Prowess
Revolve, which was started in Cerritos, Calif. and now touts a $1.8 billion market cap, grew through social media and, notably, influencer marketing. It continues to iterate on that front, successfully transitioning from static imagery to video via Reels and TikTok in a move the company sees as key to tapping a broader consumer base.
Mente said the company’s views in Instagram Reels increased 600 percent year over year in the fourth quarter. Meanwhile, new views on TikTok rose 800 percent year over year.
Revolve is one of a limited number of companies testing TikTok Shop, an e-commerce component the social media platform recently began rolling out in the U.S.
“This exciting development now enables a large and growing audience of consumers to initiate Revolve purchases directly on TikTok,” Mente told analysts Thursday. “We are among a limited set of brands selected to participate at this early stage, reinforcing our position at the forefront of innovation for consumer engagement on social channels.”
That the social media platform teamed up with a fashion house long been viewed as a veteran in influencer marketing makes sense.
TikTok’s ambitions as more than just a social platform came into view last year when Axios first reported its aim to build out a logistics and fulfillment network. That backend muscle would then support its e-commerce ambitions with TikTok Shop.
TikTok’s said as much in job postings for its offices in Los Angeles, London, Singapore and other markets in which the aim is to “deliver a brand new and better e-commerce experience.”
Luxury’s Potential
The same marketing muscle that helped grow Revolve into what it is today is now being applied to the group’s luxury business, named FWRD (pronounced “forward”).
FWRD and Revolve have largely operated separate from one another. However, the latter more recently began cross-marketing with its luxury sister division. Other efforts, such as FWRD Creative Director Kendall Jenner interviewing emerging designers for website editorial content, are seen as ways to further ramp the business.
There’s currently about a 5 percent overlap in customer bases between the two divisions.
Mente said the company sees a “great deal of opportunity for growth over the long term” for FWRD.
“FWRD has a distinct styling point of view that has truly captured the attention of younger, luxury consumers and luxury brands alike,” he added. “In addition, as evidenced by Kendall Jenner serving as FWRD’s creative director, we have trusted relationships with incredible celebrities and tastemakers based here in Los Angeles that have been an important part of Revolve brand building historically and we are increasingly leveraging that brand marketing muscle for FWRD as well.”
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