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(Reuters) -Online second-hand apparel retailer ThredUp Inc on Wednesday posted a bigger-than-expected quarterly loss in its first report as a public company and warned of clothing budgets remaining constrained even as the U.S. economy reopens.
The company’s shares tumbled 10% in extended trading as investors shrugged off a revenue beat and focused on surging costs.
The stock has gained more than 43% since the late-March debut as investors bet on a sharp growth fueled by younger customers increasingly looking past the stigma of second-hand products and rooting for sustainability.
To support that growth, ThredUp is spending rapidly on new distribution centers, marketing and automation.
Total operating expenses jumped 18.5% to $54.4 million in the first quarter and the company said it does not expect to generate positive cash flow in the near term as it re-invests in its expansion.
“We have confidence that things are getting better but you still have very high unemployment rates with women making up a disproportionate share of the job losses, so I don’t think the recovery is evenly distributed,” Founder and Chief Executive Officer James Reinhart told Reuters.
“The reality is we’re still going to have the virus impact consumer spending trends for some time.”
Reinhart added the third quarter is when the company, which sells only women and kids products, expects things to start to normalize.
ThredUp’s net loss widened to $16.2 million in the three months ended March, from $13.2 million a year earlier.
On a pro-forma basis, the company lost 17 cents per share, bigger than the 16 cents loss analysts expected, according to IBES data from Refinitiv.
ThredUp also forecast second-quarter revenue of $53 million to $55 million, above estimates of $48.8 million.
Meanwhile, shares of rival Poshmark Inc fell about 12% on Wednesday after it forecast second-quarter revenue largely below estimates.
