RVLV - Revolve stock reels as expenses inventory balloon

Revolve Group ( NYSE: RVLV ) shares marked a stark drop in Wednesday’s extended session after missing earnings expectations on Wednesday.

The California-based online retailer posted GAAP EPS of $0.22, missing estimates by $0.09, and $290.05M in revenue, $2.83M short of expectations. Net income came in at $16.3M, a year-over-year decrease of 48% due to “meaningful differences” in tax rates and surging operating expenses.

"Growth in total operating expenses outpaced our year-over-year growth in net sales, primarily due to deleverage in selling and distribution costs," the company said. "In particular, we experienced a higher return rate year-over-year with normalizing product mix being a key contributor as dresses grew to 32% of net sales in the second quarter of 2022 from 24% in the second quarter of 2021."

A significant increase in fuel prices were also blamed for the decrease in net income.

Elsewhere, inventories grew to $208.5M, a 16% sequential leap and a stark 75% jump from the inventory balance of $118.8M in the prior year quarter.

Revolve Group ( RVLV ) stock slid 15.97% in after hours trading on Wednesday.

Nonetheless, management remained upbeat on the results and road ahead for the retailer.

“We delivered strong results in the second quarter, highlighted by record net sales that increased 27% year-over-year, gross margin expansion to record levels for a second quarter, and continued strong growth in active customers," co-CEO Mike Karanikolas said.

The company’s earnings release added that net sales in July increased approximately 10% from the prior year.

“We believe our recent results illustrate our continued market share gains, reinforcing our competitive advantages and that our brands are resonating with next-generation consumers,” the company commented.

Read more on the details of the earnings results .

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