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The Ratings Game: ThredUp is lowering prices to attract customers who are paying more for other goods due to inflation

ThredUp Inc. says that it isn’t impacted by supply chain disruptions and inflation the way other retailers are, but it’s making price adjustments for customers who are getting squeezed.

“While many retailers have been forced to raise prices due to inflation or supply chain pressure, we don’t have the same level of exposure,” said James Reinhart, chief executive of the secondhand company, on the third-quarter earnings call, according to a FactSet transcript.


sources its items domestically, typically as consumers rid their closets of unwanted garments, and isn’t reliant on factories and manufacturers for goods.

“We have chosen to strategically lower prices in order to engage as many customers as possible during a time when consumers are feeling price pressure in many other parts of their life,” Reinhart said.

Average prices on the site were 15% lower year-over-year in the third quarter.

“We expect to continue this strategy of providing the most competitive prices possible in the quarters ahead, leveraging our unrivaled access to high-quality, wholly domestic supply,” he said.

Read: Supply-chain delays now could lead to discounts for shoppers down the line, analysts say

In September, ThredUp announced that it leased a Dallas facility that will house 10 million items, increasing total capacity for the company’s network by 150%. That facility, along with one in Grapevine, Tex. are expected to be up and running in 2022.

Reinhart says ThredUp is processing more goods than ever, which are shipped to the company in “Clean Out Kits” that consumers request and fill with items. ThredUp has also announced a number of partnerships with established brands, including Madewell, which also partnered with ThredUp for a shop selling secondhand Madewell items in Brooklyn.

Reinhart says this “resale-as-a-service” (RaaS) part of the business produces “high-margin revenue” for ThredUp, among other benefits.

ThredUp reported narrower third-quarter losses year-over-year and revenue of $63.3 million, an all-time quarterly high.

“ThredUp is continuing to show investors that its underlying marketplace is on healthy footing, in addition to early stage growth stories in Europe (Remix) and their rapidly evolving RaaS business,” wrote Wells Fargo in a note.

ThredUp announced in July that it has acquired Remix, a European resale company, for a $28.5 million consideration, with $6.5 million in restricted stock units for management to vest over four years after the deal closes.

Wells Fargo rates ThredUp stock overweight with a $32 price target.

This quarter, ThredUp added Crocs Inc.

and Adidas AG

to its portfolio of RaaS customers, which Wedbush analysts note now reaches a dozen.

“[T]his could continue to rise in importance from a supply-acquisition perspective,” Wedbush analysts said.

Wedbush rates ThredUp stock outperform with a $29 price target, up from $25.

Also: Michael Kors is bouncing back and Versace is in vogue, driving optimism for Capri

“ThredUp continues to execute well and built a capability set that positions it well to be a resale/ESG partner of choice for brands,” wrote KeyBanc Capital Markets in a note.

“Our ongoing brand diligence work highlights the attractiveness of ThredUp’s RaaS offering, which we believe will be even more important given changing consumer expectations.”

KeyBanc rates ThredUp stock overweight with a $32 price target.

ThredUp shares began trading in March after the initial public offering priced at $14 per share, and closed the first day up 43% at $20.00.

On Tuesday, the stock soared as much as 23% to an intraday high of $23.70, before paring gains to be up 4% in afternoon trading.

Shares have fallen 13% for the last three months. The S&P 500 index

has gained 5.6% over the same period.

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