Luxury consignment platform, The RealReal, Inc., is implementing a cost reduction plan in an effort to achieve profitability. As part of this plan, the company will be reducing its workforce by approximately 7%, which equates to around 230 employees. In addition to the workforce reduction, several stores and real estate locations will be closed.

The company will be closing two flagship stores, one in San Francisco and another in Chicago. Two neighborhood stores in Atlanta and Austin, as well as two luxury consignment offices in Miami and Washington, D.C., will also be closed. Furthermore, The RealReal plans to reduce the size of its office spaces in San Francisco and New York.

These measures are expected to result in cost savings and improve the company’s financial standing. The RealReal estimates that it will incur non-recurring charges of approximately $1.7 to $2.2 million as a result of these changes, which includes expenses such as severance payments, employee benefits contributions, and related costs. The majority of these charges will be realized in the first quarter of fiscal 2023.

The company aims to complete the implementation of the workforce reductions, including the necessary cash payments, by the end of the first quarter of fiscal 2023. These actions are part of The RealReal’s overall strategy to enhance the luxury consignment experience for its millions of members. The company recently announced plans to invest in a consignor concierge service, an improved loyalty program, and an enhanced data insights center.

Earlier this year, John E. Koryl took over as the new CEO of The RealReal, succeeding founder Julie Wainwright, who departed the company in June 2022. With these measures and leadership changes, The RealReal is strategically positioning itself for profitability and future growth in the luxury resale market.

Useful links:
The RealReal website
Forbes article on The RealReal’s cost-cutting moves