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Reformation reported third-quarter revenue of $173.6 million, up 19.1% from a year earlier, marking its 22nd consecutive quarter of double-digit growth. The company raised its full-year revenue forecast to $610 million to $612 million, while reporting a $1.1 million quarterly loss tied to the tax impact of stock-based compensation after its July IPO.
Reformation’s third-quarter revenue rose 19.1% to $173.6 million, the apparel company reported Thursday, extending its streak of double-digit growth to 22 consecutive quarters. The company also raised its full-year revenue forecast after quarterly sales exceeded analyst expectations, giving investors an early performance update following its July public listing.
Revenue for the quarter ended Sept. 26 was $3.9 million above the analyst forecast cited by WWD, which attributed the comparison to Yahoo Finance. Reformation reported a $1.1 million net loss; the company’s filing-period results were affected by taxes on stock-based compensation after its initial public offering. Adjusted earnings before interest, taxes, depreciation and amortization rose 64.2% to $23.1 million.
The company’s active customer file grew 23.4% to 1.25 million. Reformation opened seven stores during the quarter and ended it with 77 locations. Its wholesale business, another sales channel alongside its stores and online operations, increased 40.8% to $20.8 million.
Reformation lifted its full-year revenue forecast to $610 million to $612 million, representing expected growth of 20% to 21%. Its prior outlook was $602 million to $606 million. CEO Hali Borenstein told WWD the higher forecast reflects both the third-quarter result and sales performance so far in the fourth quarter. The company did not provide a separate fourth-quarter revenue figure in the report.
Growth Meets Public-Market Scrutiny
The results give public-market investors an early measure of whether Reformation can sustain its growth after its July IPO. Revenue growth, higher adjusted EBITDA and a larger customer base point to continued business expansion, while the net loss shows that stronger sales did not translate into a quarterly profit under the reported measure.
For investors, the raised forecast is a signal that management sees the recent performance continuing into the year’s final quarter. But one strong quarter does not settle the longer-term question of whether the company can maintain consistent growth in a competitive fashion market. Borenstein told WWD that investors still need to see the business deliver over time.
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A Retailer Newly Listed in July
Reformation entered public markets in July, making the third-quarter report one of its early tests as a listed company. WWD reported that shares fell 8.5% to $16.85 before the results were released Thursday, during a broader technology-led market selloff. The publication said the share price remained above the company’s $15 IPO price. The report did not give the stock’s reaction after investors had reviewed the results.
Borenstein described the company’s product approach as testing new ideas and expanding styles when customer response supports the move. She told WWD that newer colors, including purple, gained traction after limited tests, leading the company to increase the number of purple styles and options. That account is the CEO’s explanation of the company’s merchandising choices, rather than a separately reported measure of how much those products contributed to revenue.
“We’re really pleased with the business. The growth was really broad-based across geographies, across categories and selling points.”
— Hali Borenstein, Reformation CEO, speaking to WWD
Profitability and Growth Still Unsettled
The report does not specify when Reformation expects to return to net profit or how much of the quarter’s loss came from the stock-compensation tax impact. It also does not provide a breakdown of revenue by geography, product category or sales channel beyond the wholesale figure.
The full-year forecast is management guidance, not a confirmed result. The source gives no detailed fourth-quarter sales total, and it remains unclear how the share price moved after the earnings release. Investors’ response and the company’s ability to maintain its growth rate across future quarters have yet to be established.
Investors Weigh the Raised Forecast
Reformation’s investors were expected to assess the third-quarter results on Friday, according to WWD. The next key performance measure will be whether the company delivers its revised $610 million to $612 million full-year revenue outlook when it reports results for the year.
Investors will also be able to track whether customer growth, store expansion and wholesale sales continue alongside revenue gains, and whether adjusted earnings growth is accompanied by improvement in net income. The source does not give a date for the next results release.
Key Questions
How much did Reformation’s Q3 revenue increase?
Revenue rose 19.1% to $173.6 million in the quarter ended Sept. 26, according to the company results reported by WWD.
Did Reformation report a profit?
No. The company reported a $1.1 million loss for the quarter. WWD said taxes on stock-based compensation following the IPO affected the result. Adjusted EBITDA, a separate measure, increased 64.2% to $23.1 million.
What is Reformation’s new full-year revenue outlook?
Reformation raised its forecast to $610 million to $612 million, from a prior range of $602 million to $606 million. The company projected full-year revenue growth of 20% to 21%.
How many stores did Reformation have at quarter-end?
After opening seven stores during the quarter, Reformation ended the period with 77 locations.
Source: wwd.com
