Reformation, the direct-to-consumer apparel brand, announced plans to double its store count over the next five years, having concluded the second quarter of 2023 with 70 outlets. This ambitious expansion strategy coincides with the company marking its debut earnings report since going public and posting impressive financial results.
Strong Revenue Growth in Second Quarter
For the second quarter, Reformation reported a 24% year-over-year increase in net revenue, reaching $155.2 million. The brand’s direct-to-consumer sales grew by 21.2%, with wholesale revenue experiencing an even greater surge of 48.7%. This revenue boost was partly attributed to a nearly 23% rise in the number of active customers, though this was tempered by a 1.4% decrease in net revenue per customer, typical of spending patterns from new clientele. Despite these dynamics, net income dramatically rose by 79.4% to $12.4 million.
Future Revenue Projections and Store Expansion
Reformation projects a full-year net revenue growth between 18.6% and 19.5%, aiming for a range between $602 million and $606 million. CFO Joshua Moore indicated that the company plans to open an additional nine to ten stores before the year’s end, bringing the total expected new openings for the year to 15 or 16 outlets by 2026.
Operational Strategy and Market Position
Though Reformation targeted a $1 billion valuation at its July IPO, the stock traded towards the lower end of expectations. Analysts from William Blair highlighted a cautious yet positive outlook on Reformation’s potential growth, considering its plans for retail expansion and category diversification. They acknowledged some market reservations typical for new public entities, yet pointed out the company’s quick production and responsive supply chain as strengths. CEO Hali Borenstein emphasized the brand’s commitment to agile production, with over half its products made in under 60 days, and noted the inclusion of styles with proven track records accounting for 90% of their direct-to-consumer revenue. This operational agility is central to sustaining speed, sustainability, and quality in Reformation’s offerings.
Reporting based on coverage first published by retaildive.com.