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What happened

Shares of Revolve Group (NYSE:RVLV) have soared this year, with shares of the influencer-driven online fashion company up 121%, according to data from S&P Global Market Intelligence.

The stock has emerged as one of the pre-eminent reopening plays as its business is focused on selling occasion-wear like dresses to millennials and Gen Z.

Image source: Revolve Group.

As the chart below shows, the stock has climbed steadily over the course of the year, with a particularly strong surge in June.

RVLV data by YCharts

So what

As an apparel company, Revolve mostly struggled during the pandemic as revenue declined slightly in 2020, though the company was able to deliver an increase in profit thanks to disciplined cost control and inventory management.

Revolve’s fourth-quarter earnings report helped build momentum as the company beat estimates on the top and bottom lines, and adjusted EBITDA increased 37% to $18.7 million even as revenue fell 5% to $140.8 million. The stock gained 25% over a two-day span on the news.  

In May, the company turned in a strong first-quarter earnings report showing that momentum was shifting toward the reopening. Revenue jumped 22% to $178.9 million, boosted by a surge in March thanks to another round of stimulus checks. That easily beat estimates at $158.7 million, and earnings per share jumped from $0.06 to $0.30, well ahead of the analyst consensus at $0.13.

The stock actually jumped 12% on the news of the strong report, but then dove after that for unclear reasons. In late May and June, the stock soared again, though again there was no company-specific news out on it.

Now what

Management did not offer guidance in the recent earnings report, but it did say that sales growth in April meaningfully outpaced the 22% growth in the first quarter, though it is also lapping an easy comparison during the lockdowns last year. With wedding season afoot currently, and young adults fully embracing the ability to be social again, Revolve should continue to deliver strong results at least through the rest of the year.

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