TheRealReal Isn't Saying But Higher Financing Rates and New CFO Are the Smoke

eCommerce

Jun 15

Written By Rick Watson

Founder CEO Julie Wainright departs unexpectedly. Now the fire is coming... Just give it the next few months.

A few facts:

* TheRealReal loses more money each year as it grows. In 2021 the company's net loss was $236M.

* An 11-year vet and current President was not made Interim CEO, instead it is shared with the CFO.

* What about this CFO? - well, Robert Julian only started 9 months ago. Ding ding. We are on to something here.

* This CFO Robert Julian has never been at the same company more than 3 years in his last 4 stops.

* Two of his last stops have been associated with major acquisitions (not all successful) -- Callaway acquiring Ogio, and Sportsmens Warehouse acquisition by Bass Pro Shops being blocked by FTC.

* The company raised $300M in 2019 from its IPO.

* In 2020 and 2021, the company issued new debt to investors to the tune of $143M in notes in 2020 and $244M in notes in 2021.

In 2022, the company cannot issue new debt at the same favorable terms as previous years. And it likely cannot issue new stock.

What about Founder & CEO Julie Wainwright? What did she do wrong? I don't predict there is a big scandal to drop despite the "sudden departure". She just built an unprofitable growing business in a large bull market. Like a lot of founders.

You know what else is "sudden"? Look at any article from Jan 1 2022 predicting this year, and then read the same article even 2 months later. That is also sudden.

The CFO and new Interim CEO will be very involved, starting rfn, about why the company is losing so much money and how that can stop immediately so that the company can live another day, or survive

Frankly I expect this decision for Julie Wainwright to resign was UNIVERSALLY AGREED by both the Board and Julie. i.e. there is no nefarious takeover or ousting involved here.

Now what for employees? I think we (unfortunately) know what's next. It needs to get profitable/restructure or bought, and fast.

The company had 25% layoffs in 2020. Unfortunately I expect this year it will be worse.

circulareconomyresalerecommercejuliewainwrightprofitabilitytherealreal

Rick Watson

Rick Watson founded RMW Commerce Consulting after spending 20+ years as a technology entrepreneur and operator exclusively in the eCommerce industry with companies like ChannelAdvisor, BarnesandNoble.com, Merchantry, and Pitney Bowes.

Watson’s work today is centered on supporting investors and management teams incubating and growing direct-to-consumer businesses. Most recently, in partnership with WHP Global, Rick was a critical resource in architecting the WHP+ platform, a new turnkey direct to consumer digital e-commerce platform that powers AnneKlein.com and JosephAbboud.com.

Watson also hosts a weekly podcast, Watson Weekly, where he shares an unbiased, unfiltered expert take on the retail sector’s biggest players.

In the past year alone, Rick has spoken at many in-person and virtual events as well as podcasts on topics ranging from retail/ecom to supply chain/logistics and even digital grocery including CommerceNext IRL, ASCM Connect, and Retail Innovation Conference.

https://www.rmwcommerce.com/

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