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Home » Retail » Poshmark lowers outlook after mixed holiday quarter

Poshmark lowers outlook after mixed holiday quarter

by PublicWire
March 23, 2022
in Retail
Reading Time: 3 mins read
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Dive Brief:

  • Poshmark on Tuesday said that Q4 revenues rose 22% year over year to $84.2 million. Gross merchandise value grew 27% year over year to $490.8 million, per a company press release.

  • In the trailing 12 months, the secondhand apparel marketplace saw its number of active buyers rise 17% year over year to 7.6 million. Net loss widened to $14.8 million from $3.2 million a year ago.

  • 2022 has had a rocky start, which executives attributed to the surge in COVID-19 in January and ongoing macroeconomic headwinds. The company lowered expectations for its first quarter and plans to keep up marketing efforts.

Dive Insight:

Competition is getting fierce in the secondhand market, but Poshmark CEO and founder Manish Chandra said Tuesday that the opportunity has grown even more.

“When we talk about the future of shopping as being secondhand, we talk about the future of shopping as being online, and we talk about the future of shopping as being social. Well, these trends are exploding in a massive way with the younger generations, with the older generations, and COVID has just accelerated it,” he said, per a Motley Fool transcript. “So, we find ourselves in even a bigger market opportunity than we did when we were starting out with COVID.”

Poshmark’s online tools include various ways for buyers and sellers to communicate, and last year social interactions on its site were up 47% compared to 2020, to more than 44.6 billion. Poshmark expects to launch its Suede One authentication capability, acquired in October, later this year, Chandra also said.

“This social engagement drives community connection and conversion,” he said. “One thing that distinguishes Poshmark is that more than 80% of all purchases are preceded by social components such as a like, comment, or offer.”

However, the company is scrambling to redo a search algorithm tweak after seller complaints, which MKM Partners noted adds to its pressures in the near term.

Poshmark’s four growth strategies — category expansion, product innovation, new seller tools and international growth — contributed to what executives said was a strong fiscal performance and remain in focus to drive GMV, revenue and active buyer growth. The company introduced electronics sales ahead of the holidays last year and found that 35% of those customers and 18% of those sellers are new to Poshmark. The average order value of those items tops the site’s overall AOV, executives said.

The company is touting spring cleaning season as an opportunity to jumpstart sales. Nearly three-quarters of consumers plan to clean out their homes, and more than half of them are focused on getting rid of unwanted apparel, according to a Morning Consult survey commissioned by Poshmark. More than a quarter of those closet-cleaners hope to sell those items, with younger and wealthier respondents more likely to sell their clothes, according to that report. Meanwhile, nearly a quarter of those surveyed want to buy secondhand clothes.

However, Poshmark’s need to spend more on marketing will continue to weigh on its profitability, analysts warned. “While we like the resale market structurally, we are frustrated by POSH’s recent performance,” Wedbush analysts said in emailed comments Wednesday.


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