It was already apparent Revolve Group had big plans for the namesake label it — some might say finally — launched earlier this year. Just how big is now coming into focus.
Revolve Los Angeles debuted in March with an opening price point of $200. It marked the company’s foray into placing its name on an apparel collection.
While brand launches and diffusion lines for clothing companies and retailers are commom, Revolve Los Angeles is pitching itself as the halo division for a business started over 20 years ago.
Tuesday’s earnings update with Revolve Group executives offered an additional hint at where the company wants to take its new label.
Co-founder and co-CEO Michael Mente said during the quarterly update with analysts that Revolve Los Angeles is the company’s “premium pinnacle product” and likened its proposed market positioning to Ralph Lauren’s Purple Label.
That now makes sense with the first collection priced as high as $3,500 with pieces that included hand-embroidery and Italian knit meshes. But Revolve Los Angeles won’t be just high-end eveningwear. Mente said the label would exist in “every aspect” of a shopper’s wardrobe.
So far, the executive said the Revolve label is performing “extremely well,” giving management the confidence to further expand into “every aspect of [a shopper’s] lifestyle.”
That projection’s based on two collections, with the most recent being the summer release, which the company reported as having higher sell-through than the launch drop.
Smart Move
The move into building Revolve as an apparel brand, rather than just the platform for other companies’ clothing and accessories, makes plenty of sense for a business that leveraged being at the forefront of digital marketing to Millennials into a contemporary and luxury retailer that’s also brand builder and strategic investor.
Revolve now has several years under its belt of creating in-house brands and, as a retailer, understands its shopper base well. With that foundation, Revolve Los Angeles is a strategic play that diversifies the company’s revenue stream with a higher margin business, further bolsters brand equity and could (once fully developed) offer a hedge to the volatility that can come with third-party brands.
Co-founder and co-CEO Mike Karanikolas had it right when he said Revolve Los Angeles is the halo for the entire Revolve brand and ecosystem.
It also acts as a bridge between Revolve and its sister, luxury business FWRD.
Why Not?
Unlike some companies, Revolve isn’t tryimg to revive a flagging brand or pull off a turnaround. Its continued growth gives it the time and money to toil away at building a label that is largely out of reach for the mass consumer from a pricing perspective but that management hopes will resonate with that segment and beyond all the same.
Nearly every quarterly update from Revolve Group shows growth. The company has solidified its presence as a master at digital marketing and parlayed that into the countless brands it built over the years with a gaggle of influencers.
It was more of the same in the second quarter.
Revolve Group posted net sales up 12 percent year-over-year to $347.4 million. All business divisions notched double-digit increases led by Revolve, where sales increased 13 percent to $302.5 million. FWRD sales rose 11 percent to $44.9 million.
Companywide net income jumped 86 percent to $18.6 million, largely driven by the International Emergency Economic Powers Act tariff refunds.
It was, as some analysts pointed out, a good quarter for the business.
The real story now is Revolve Los Angeles and just how far the company can take the premium offering under its own name.
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