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Revolve: Tapping Into The Millennial And Gen Z Market

Mar. 03, 2021 2:00 PM ETRevolve Group, Inc. (RVLV) Stock6 Comments
Brendan Graniez profile picture
Brendan Graniez


  • The luxury apparel and global cosmetics markets are large and growing with few online-only players.
  • Revolve is a digital-first retailer leveraging online channels to create a brand unlike any of its competitors.
  • Millennial and Gen Z consumers spend a significantly larger portion of their income on discretionary items such as clothing and beauty products than previous generations did.
  • Revolve is well-positioned to tap into this market as it continues its international expansion building upon its already impressive 1.5 million active users.

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Revolve (NYSE:RVLV) is a leader in online retail for premium and luxury clothing as well as beauty products. The company is the go-to shopping destination for the Millennial and Gen Z consumer and has a very strong social media and influencer presence. Influencer marketing is still very much in its infancy and Millennial and Gen Z consumers are still early in their careers. Discretionary spending for these generations is much higher for items such as clothes and beauty products.

The addressable luxury apparel market is already large at $72.13 billion in 2020 and will continue to grow as these consumers continue in or begin their careers. Revolve's recent expansion into beauty products unlocks an even larger addressable market with the global cosmetics market valued at $380.2 billion in 2019 and growing 4.5% per year. Revolve has consistently grown sales and leverages 17 years of data to sell a vast majority of its products at or near full price, capturing close to as much revenue as possible. This leads Revolve to have gross margins that are much higher than competitors and has consistently enabled the company to operate at a profit. The company has also begun to cost-effectively expand outside of the United States with limited investment and will continue to tap into markets in Europe, Australia, Canada, and Asia Pacific.

With ~1.5 million active users, Revolve has built a loyal following and is still at the beginning of capturing a sizeable position in these markets. Revolve presents an attractive opportunity to tap into a subset of the

This article was written by

Brendan Graniez profile picture
I am by no means an expert, just writing to build my own investing process and receive constructive criticism to further develop as an investor.

Analyst’s Disclosure: I am/we are long RVLV. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (6)

@Brendan Graniez How does this compare to FTCH? Would that not be a suitable competitor here?
Brendan Graniez profile picture
@Karan1 FTCH is a very interesting company and it was one that I was considering mentioning. However, there are a few key differences. Relative to its total revenue and size, FTCH holds significantly less inventory on hand than Revolve. FTCH acts as a marketplace to match small luxury boutiques with consumers who otherwise would never have heard of them. There are benefits to this, but as a result FTCH has lower margins (likely as a result of not buying at wholesale prices and holding inventory). The platform itself is very interesting and is a great way to broaden the outreach of small shops. The partnership with Alibaba-Richemont is also something to keep an eye on, but at the end of the day FTCH has still never turned a profit.
@Brendan Graniez Thanks for the reply and for your insights Brendan, appreciate it!
Great article!
k-hoo profile picture
Fantastic article, Brendan. Well-written, good analysis and comparisons, held my attention. Nice to have you here at SA. Welcome and Good luck!
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