Revolve Profit Jumps as Customer Growth Accelerates
Gross margin reached 56.6%, helped by a $5.6 million tariff refund.
The online fashion retailer Revolve Group (RVLV) increased second-quarter net income 86% to $18.6 million as customer growth reached its fastest pace in nearly three years.
Net sales rose 12% to $347.4 million, easing from 16% growth in the first quarter while remaining above the rates recorded in the final two quarters of 2024. Sales increased 1.3% sequentially from $342.9 million. Diluted earnings rose to $0.26 a share from $0.14 a year earlier, including a $0.06 benefit from tariff refunds.
Trailing-12-month active customers increased 11% to 3.041 million, accelerating from 8% growth in the first quarter and adding 115,000 customers sequentially. Orders rose 11% to 2.701 million, while average order value was essentially flat at $299, making transaction volume the main sales driver.
The REVOLVE segment increased sales 13% to $302.5 million, and FWRD sales rose 11% to $44.9 million. International sales grew 16% to $78.4 million, outpacing an 11% increase in domestic sales.
Gross margin expanded 254 basis points to 56.6%. IEEPA tariff refunds contributed 162 basis points, and the company still recorded about 90 basis points of expansion excluding the refunds. Adjusted EBITDA rose 17% to $26.8 million, including the $5.6 million refund benefit.
Higher spending absorbed part of that margin gain. Marketing expense increased to 16.5% of sales from 15.2% a year earlier as Revolve invested in initiatives including REVOLVE Los Angeles. Selling and distribution costs reached 17.9% of sales, driven mainly by higher shipping rates and partly offset by a lower return rate.
July net sales rose about 18%, accelerating from the second quarter. Revolve raised its full-year marketing-expense forecast to 15.8% to 16.0% of sales and its general-and-administrative expense forecast to $170 million to $172 million. It maintained its gross-margin outlook of 53.5% to 54.0%, which assumes no additional IEEPA tariff refunds.
Revolve repurchased $9.9 million of shares during the quarter, leaving $45.7 million under its authorization. Free cash flow swung to negative $10.9 million as unfavorable working-capital changes weighed on cash generation, while inventory rose 25% to $275.8 million, more than twice the pace of sales growth.