RealReal’s new CEO sees a ‘bright future’ but has ‘no illusions’ – WWD

John Koryl is still settling in as Chief Executive Officer of The RealReal Inc., but he has a clear mission – to make the company profitable.

And while he pointed to the company’s many strengths — its digital-first approach and sustainability history — he knows it won’t be quick and easy.

“I see a bright future for the business,” Koryl told analysts on a conference call after the company announced better-than-expected fourth-quarter results. “As we all know, the company’s valuation is currently under pressure and achieving profitability is the company’s focus.”

While RealReal’s shares approached $29 after its 2019 IPO, shares closed Tuesday at $1.35 for a market cap of $132 million. The quarterly update helped some, sending the stock up 4.4 percent in after-hours trading to $1.41, but there’s clearly still a long way to go.

“I have no illusions that The RealReal’s path to profitability will be achieved overnight or with minimal effort,” said Koryl. “Rather, these types of achievements cost both time and energy.”

Koryl said he’s optimistic about the company’s prospects, noting he has the experience to transform the company with a 30-year career “where he finds efficiencies and drives profitable growth in e-commerce businesses.” .

Most recently, he led Canadian Tire’s online business through the pandemic. Prior to that, he was President of Stores and Online at Neiman Marcus Direct, where he and the team deployed new marketing tools, optimized the website experience and increased omnichannel efficiencies to drive growth.

“During this time, we’ve balanced growth with profitability and focused on marketing to the right customers to give them the right experience, and doing it as efficiently as possible,” said Koryl of his time at Neiman Marcus. “This requires a lot of testing and scaling up small wins quickly to get significant results.”

He cut out his work at RealReal for him.

RealReal’s net loss for the quarter narrowed to $39 million from $52 million in the prior year. Adjusted earnings per share were 29 cents, 6 cents better than analysts’ average forecast deficit of 35 cents.

Revenue for the quarter ended December 31 increased 10 percent to $160 million while gross merchandise volume increased 13 percent to $493 million.

The company is already in the midst of a number of changes to boost results, from changing its shipper commission structure and cutting costs to optimizing pricing and creating new revenue streams.

That year, the company laid off about 230 employees, or 7 percent of its workforce, and announced plans to close flagship stores in San Francisco and Chicago, as well as two convenience stores and two consignment offices.

RealReal has $294 million in cash and equivalents on the books and is operating more efficiently, but still has a long way to go to break even.

Adjusted losses before interest, taxes, depreciation and amortization for the year narrowed to $112.4 million, or 18.6 percent of revenue, from $126.9 million, or 27.1 percent of revenue, reported in the were recorded in 2021.

RealReal expects to release full-year Adjusted EBITDA in 2024, but is waiting until next quarter to provide guidance for 2023 beyond the current quarter to give Koryl more time to finalize its plan.

In the first quarter, the company expects adjusted losses before interest, taxes, depreciation and amortization of $31 million to $35 million on revenue of $135 million to $145 million.