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Apparel shortages to drive bumper holiday sales for secondhand retailers -Breaking

by Mike Robinson

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© Reuters.

By Uday Sampath Kumar

(Reuters). Several new retailers of secondhand apparel, ThredUp or Poshmark, are expecting strong sales at the end of the year. The shortage in clothing stores is forcing shoppers to think about thrifting to help them fill their holiday shopping baskets.

Adobe Analytics (NASDAQ:) Analytics reported that Apparel was the U.S. sector with the most out-of-stock online levels in the lead-up to Christmas.

These supply shortages could drive more people towards secondhand clothing stores like Poshmark Inc. ThredUp Inc. ReaReal. Secondhand clothing companies, such as Poshmark Inc., ThredUp Inc. or ReaReal aren’t affected as much by global supply chain issues, as their stock comes mainly from American households.

According to Jane Halirez & Associates, inventory is in short supply right now. Consumers are going to shop where they find inventory to make sure they have things in time for the holidays,” said Jessica Ramirez, retail analyst at Jane Hali & Associates.

THE CONTEXT

The growth of secondhand stores has been rapid over recent years, as eco-conscious Gen Z consumers and millennials increasingly consider it fashionable to purchase used products while reducing their ecological footprint.

(GRAPHIC: Thrifting boom – https://graphics.reuters.com/USA-RETAIL/egvbkmgexpq/chart.png)

This market will only grow in size. Accenture (NYSE:) found that more than three quarters of Americans are planning to shop for second-hand clothes this holiday season. This is based on a poll of U.S. consumers.

THE FUNDAMENTALS

* Holiday-quarter sales are expected to rise 22.9% for Poshmark and 53.3% for RealReal (NASDAQ:), according to IBES data from Refinitiv

* For the reporting quarter, Poshmark is expected to report revenue of $82.7 million, while RealReal is expected to report $113.3 million and ThredUp $61.8 million

(GRAPHIC: Sales of major U.S. secondhand apparel retailers – https://graphics.reuters.com/POSHMARK-RESULTS/zdvxonrgjpx/chart.png)

* All three companies are expected to report losses on a per share basis

WALL ST. SENTIMENT

* Poshmark has an average price target of $43, ThredUp $28.50 and RealReal $22

* All three stocks have an average “buy” rating on Wall Street

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