Dive Brief:
- Reformation implemented a new AI-backed planning tool that improves its ability to evaluate product performance and forecast demand, CEO Hali Borenstein said on an earnings call Thursday. The executive said this bolsters in-stock rates and full-price selling.
- The apparel brand — which began trading as a public company in July — also noticed a consumer shift away from minimalism toward “novelty, texture and color” ahead of Q3, Borenstein added.
- Reformation's Q3 net revenue grew about 19% year over year to $173.6 million. The brand swung from a net income the same period last year to a net loss in the latest quarter due to the tax impact of stock-based compensation from its initial public offering.
Dive Insight:
Reformation may be new to the public markets, but its recent quarterly results have exceeded expectations, according to analysts from William Blair.
“The company continues to demonstrate an ability to read and react to demand faster than traditional apparel peers (weekly apparel drops), while strong brand resonance is driving outsized customer acquisition alongside healthy retention and cohort spending,” William Blair analysts remarked in a Thursday note. “New stores are also tracking ahead of plan and driving broader DTC growth in their markets, while AI-enabled merchandising should further enhance the company’s ability to localize assortments and chase demand as it scales.”
The DTC-focused apparel brand opened seven new stores in the quarter and ended the period with 77 locations.
Active customers during Q3 jumped 23.4% to 1.25 million and the brand raised its full-year guidance. Reformation now expects net revenue for the year to range from $610 million to $612 million, an increase from the previously expected range of $602 million to $606 million.
Looking to the holidays, the brand’s fourth quarter is off to a good start, Borenstein told analysts on the call.
“We are confident heading into Q4 based on all of the data we've seen so far and the response,” the chief executive said, adding that Reformation’s agile and fast merchandising model is “a particular advantage in a dynamic environment right now, particularly in holiday because we are able to so quickly identify trends and respond in a period that is so important.”
