At the apparel retailer’s three locations, its private labels thrive and margins are higher, but it’s “years away” from having an extensive global footprint, co-founder Michael Mente said Tuesday.

Revolve, which sells its own brands and other fashion labels mostly online, opened its third store just over a month ago at the Aventura Mall in the Miami area, and it’s surpassing the company’s expectations.

Store events and the assortment, including various curated edits throughout the year, cater to the local lifestyle and culture. Already higher-margin private labels are generating almost 60% of net sales there, co-founder and co-CEO Michael Mente told analysts Tuesday.

Customers who shop both in Revolve’s stores and online spend nearly three times more than those who shop either channel alone, according to Mente. In addition to the Aventura location, which opened in late September, Revolve opened at The Grove in Los Angeles in January and has run a store in Aspen, Colorado, since 2024. Before that the company experimented with a series of pop-ups.

Several analysts noted that brick and mortar provides a major opportunity for Revolve, following the company’s report Tuesday that, while Q3 net sales rose 20% year on year to $356 million, the bottom line suffered. Gross margin in the period contracted by 75 basis points to 53.9% and net income fell 27% to $15.5 million.

“We are also increasingly encouraged by progress in physical retail, where a higher owned-brand mix offers a potentially meaningful margin opportunity as the footprint expands over potentially decades,” William Blair analysts led by Dylan Carden said in a Tuesday research note.

Source link