The RealReal (REAL) - Get Report expects to report a first-quarter loss and is slashing payroll and cutting other costs as it grapples with the impact of the coronavirus crisis on its chain of luxury-goods-consignment stores.
The San Francisco chain estimated its first-quarter GAAP net loss at $38.9 million to $39.9 million. Gross merchandise volume rose 15% from a year earlier to $258 million.
The RealReal reported Tuesday that it had cut payroll expenses by 15% - including a 10% headcount reduction - in addition to furloughing 15% of its employees at its stores, e-commerce centers and other locations.
At Dec. 31 the company had 2,353 full-time staffers, the company's Securities and Exchange Commission Form 10-K says.
“We were off to a strong start in Q1, on track to meet or exceed our Q1 guidance,” Chief Executive Julie Wainwright said in a statement.
But the company said that since March 17, “when [San Francisco] Bay Area shelter-in-place directives went into effect, and continuing into April, gross merchandise volume dropped 40% to 45% from a year earlier.
The retailer said it has also cut executive salaries, renegotiated vendor contracts, postponed the opening of its Chicago store and deferred some capital costs, among other measures.
RealReal said the cost cuts will save $70 million in 2020, in addition to a $15 million drop in capital spending.
"This unprecedented crisis has significantly impacted our ability to operate at previously planned levels, stemming primarily from limited warehouse operations," said Matt Guske, the RealReal's chief financial officer.
The retailer said it has also taken extensive steps to deal with the health challenges posed by the coronavirus, temporarily closing all stores and luxury consignment offices and suspending all in-person "white glove" consignment appointments.
Shares of the RealReal at last check fell 3.9% to $7.69, bucking a broad-market rally as the S&P 500 Index was recently up nearly 2%.