Dive Brief:
- After 11 years, The RealReal Founder Julie Wainwright is stepping down as CEO, chairperson and member of the board directors, effective Tuesday, according to a company press release.
- The company’s Chief Operating Officer, Rati Sahi Levesque, and Chief Financial Officer, Robert Julian, will act as co-interim chief executive officers.
- The RealReal will retain a firm to undergo the search for a new chief executive officer. Wainwright will serve in an advisory role to the company through the end of this year.
Dive Insight:
Without much warning, the CEO of luxury consignment retailer The RealReal is out.
Documents regarding her June 7 departure were filed with the Securities and Exchange Commission on June 6, with the paperwork stating that her “decision to resign was not due to any disagreements with the Company.”
“I am deeply proud of the company we have built and am honored to have worked with a team that champions our founding vision of creating a more sustainable future for fashion,” Wainwright said in a statement. “The RealReal continues to make progress on its path to profitability, and I feel now is the right time for the next generation of leadership to guide the company through its next chapter."
In comments regarding her exit, Lead Independent Director Rob Krolik thanked Wainwright for her leadership. “Julie is a true visionary and pioneer whose passion for sustainable retail and deep e-commerce expertise helped transform the luxury resale market and create the broader circular economy for the benefit of consumers across the country.”
Until Dec. 31 at the latest, Wainwright will continue to serve as an employee of the company in her role as founder. During that time she will receive her annual base salary of $440,000 and be eligible for an annual bonus for the 2022 fiscal year, according to the filing.
While acting as interim co-CEOs, Levesque and CFO Julian will also remain in their respective roles. Levesque has served as COO since 2019, and previously acted as the company’s chief merchant and director of merchandise. Julian has worked as CFO since 2021 and has over 30 years of financial management experience at public and private companies.
According to Credit Suisse analyst Michael Binetti, Wainwright's departure undermines confidence in plans unveiled in March during the company's investor day, which outlined goals based on a 30% increase in revenue, operational excellence and reining in expenses. But Binetti hailed "Julian's sober cost control plan."
Wedbush analysts Tom Nikic and Ezra Weener called Wainwright’s resignation “probably the right move” in emailed comments, noting that The RealReal remains unprofitable. “We believe that the company sees itself as entering the next chapter of its lifecycle, transitioning from a 'grow at all costs' mentality to one more focused on profitability and margins.”
Wedbush also noted that Julian's arrival last year and now his appointment as co-interim CEO demonstrates a commitment to profitability. “While we certainly respect Ms. Wainwright accomplishments in creating this business and growing it to ~$2 billion in GMV … we think the time was right for a change,” the analysts wrote.
In the company’s latest earnings for the first quarter ending March 31, total revenue was $147 million, an increase of 48% year over year, while net loss was $57 million. In a letter to shareholders on the quarter, Wainwright and Julian wrote that the company continues to see strong demand. “As inflation has ramped and prices have increased in the primary (i.e. new goods) luxury market, we believe The RealReal is a demonstrated value option offering unique and highly-coveted products within the luxury goods space. We believe we are positioned for a strong 2022,” they wrote.
Over the years The RealReal has defended its authentication record, and has stated that the company has a “rigorous authentication process” that is core to its brand. In 2021, the company reached a settlement for $11 million in cash to resolve a class action lawsuit brought on by an investor that centered on such authentication claims. The lawsuit, which was initially filed in the fall of 2019, alleged that The RealReal’s authentication process “fell far short of its description” and investors were impacted as a result.
