Apparel companies started the year with a stormy outlook. Headlines prophesizing mass store closings and sales slowdowns dominated the news cycle and sent investors running for the hills…
Advance monthly retail sales in January exceeded $600 billion, showing slower growth compared to the year prior.
Unsold merchandise and forced price reductions weighing on margins caused many retailers to lower earnings expectations.
The verdict on Wall Street: Cash-strapped consumers simply weren’t willing to shell out for “softgoods” like apparel, footwear, and accessories.
But we’re here to tell you it’s not all doom and gloom for apparel companies.
We have a direct line to what real people are saying on Main Street with a powerful social media machine that analyzes millions of posts per day to tell us what folks are purchasing, which brands they’re buying from, and how happy they are with those products.
Armed with those real-time consumer insights, we’re able to spot investable opportunities that Wall Street hasn’t even caught onto yet – like the one we’re bringing you here today.
This company is way outperforming competitors in consumer demand and happiness in an otherwise gloomy apparel sector.
And because Wall Street can’t see what we do, they’ve let this company’s share price slip right into “buying” territory – creating a special “divergence” opportunity for Derby City Daily readers.
Let me show you what our data reveals about this apparel stock before the rest of the market catches on to its profit potential…
Wall Street Is Missing Out on Revolve (RVLV)
Wall Street is missing out on Revolve (RVLV), an online retailer specializing in high-ish fashion that’s on-trend, well-made, and flaunted by beloved celebrities and influencers like Sydney Sweeney and Jennifer Lopez…
It’s not quite runway-level… But its apparel goes for a much higher price point than anything you’re going to find at Target or a fast-fashion retailer like Shein.
Revolve customers spent an average of $304 per order in 2022, which puts the company right in the sweet spot between unattainable luxury and what everyday consumers can actually afford.
And that’s exactly what caught our attention last October when we featured Revolve in our High-End Retail MegaTrends Report.
Following that report, RVLV shares reached peak gains of 48% in February.
But the stock has cooled off since then. And according to our predictive consumer data, we believe this is a great opportunity to double down on RVLV for another round of profits.
Here’s what we’re seeing that the rest of the market can’t…
Demand Is Rising Ahead of Revolve’s Peak Shopping Season
When you think of “peak shopping season” for retailers, most folks think of November to December, leading into the holidays. And that might be true for a traditional department store like Walmart or Target.
But “peak shopping season” takes on an entirely different meaning for a company like Revolve catering to a younger, Instagram-addicted customer base.
For this group, the headliner event of the year is “festival season” in the spring and summer – when Revolve’s trendy apparel pieces and influencers really shine.
And our data suggests Revolve is in for a smashing season…
Just halfway into March, and consumer mentions of shopping with Revolve are on pace for the highest level recorded since its pre-IPO days:
Revolve exceeded expectations in its Q4 2022 earnings report last month, stating that sales momentum should continue into 2023 – and our Consumer Purchase Intent (PI) data shows it’s on pace for a blockbuster performance.
Loyal Customers Boost Momentum
Revolve is doing a bang-up job attracting new shoppers: Last quarter, the company surpassed 2.3 million active customers, adding 500,000 over the last calendar year alone.
But thanks to LikeFolio data, we also know Revolve is just as good at keeping those customers coming back for more.
Over the last three months, the number of users returning to revolve.com grew by 17% year-over-year (YoY):
That’s a promising acceleration from two quarters ago when returning user growth was closer to 10%.
Revolve knows how to keep its customers happy. In fact, they’re not just happy – they’re emphatic…
Emphatic Customers Are Good for Business
Revolve Consumer Happiness is nearly 90% positive. In other words, nine out of ten consumers talking about their Revolve experience on social media are positively gushing about the brand:
90% is an extremely high level of positive sentiment for the apparel sector – especially for an online-based retailer, where customers have to rely on images and descriptions to find the right style… And cross their fingers it will fit once their package arrives.
Users on Twitter seem to love the quality of Revolve clothing and how fast orders ship, with one user even comparing its speedy service to Amazon’s:
These shoppers appear willing to spend more on high-end apparel for the perceived quality.
And they aren’t alone.
Consumer demand for high-end apparel continues to significantly outperform generic apparel shopping mentions in 2023 despite persistent inflation…
Which means there are larger macroeconomic trends working in Revolve’s favor, well beyond the festival season.
The Bottom Line: RVLV Is a Classic “Divergence” Opportunity
RVLV shares are down 15% since Mar. 6. What Wall Street can’t see – but we can – is that Revolve demand is racing higher:
That increasing gap between RVLV’s share performance compared to consumer demand creates a “divergence” opportunity for savvy investors.
In other words, you now have a chance to pick up shares of a retailer outperforming its peers before Wall Street catches on and sends the stock soaring.
Until next time,
Andy Swan
Co-Founder