Revolution group (NYSE: RVLV) shares fell sharply in Wednesday’s extended session after missing earnings expectations on Wednesday.
The California-based online retailer posted GAAP EPS of $0.22, missing estimates of $0.09 and revenue of $290.05 million, $2.83 million below expectations. The net income came to $16.3 million, a 48% year-over-year decrease due to “significant differences” in tax rates and increased operating expenses.
“Total operating expense growth outpaced our year-over-year net sales growth, primarily due to deleveraging of selling and distribution costs,” the company said. “In particular, we saw a higher rate of return year-over-year, with product mix standardization a key driver, with dresses growing to 32% of net sales in Q2 2022, versus 24% in the second quarter of 2021.”
A significant increase in fuel prices was also attributed to the decline in net profit.
Elsewhere, inventories hit $208.5 million, a sequential jump of 16% and a jump of 75% from the inventory balance of $118.8 million in the year-ago quarter.
Revolve Group (RVLV) shares slipped 15.97% after-hours trading on Wednesday.
Nonetheless, management remained optimistic about the results and the road ahead for the retailer.
“We delivered strong second quarter results, highlighted by record net sales that increased 27% year-over-year, gross margin expansion to record levels for a second quarter and a continued strong growth in the number of active customers,” said co-CEO Mike Karanikolas. said.
The company’s earnings release added that net sales in July were up about 10% from a year earlier.
“We believe our recent results illustrate our continued gains in market share, reinforce our competitive advantages, and our brands resonate with next-generation consumers,” the company commented.
Learn more about the details of the earnings results.