What happened
Shares of The RealReal (REAL 5.59%), the online luxury goods resale platform, were pulling back today after CFO Robert Julian said he was stepping down from the company.
As a result, the stock was down 8.3% as of 11:36 a.m. ET today.
So what
In a press release this morning, The RealReal said that Julian would step down from his role as CFO by Jan. 31, 2024, or if the company finds a new CFO before then. Julian has also agreed to provide limited consulting services from Feb. 1, 2024, to June 30, 2024, and the board of directors is working with an executive search firm to find a replacement.
CFO resignations are sometimes interpreted as a negative sign for a stock, especially if the business is already struggling. After all, the CFO knows the books better than anyone else, so some investors think a departure shows that the business performance might be weaker than widely known.
It wasn't clear from the announcement why he was stepping down, though Julian is now 61 years old, so he's approaching retirement age. He joined the RealReal as CFO two years ago.
RealReal's founder, Julie Wainwright, also stepped down abruptly as CEO last year, resigning from her board positions as well.
Now what
Like other online fashion brands, The RealReal is struggling in the current environment, as sales of discretionary goods have been weak and e-commerce growth has stalled after a boom during the pandemic.
In fact, the stock is down 93% from its 2021 peak, and recent results have not been encouraging. Revenue fell 15%, and the company continued to report a sizable loss on the bottom on both generally accepted accounting principles (GAAP) and adjusted bases.
The CFO resignation deals The RealReal another setback when the business is in the process of a turnaround, focusing on selling higher-priced items, which is driving higher gross margins but lower revenue.
Given the additional challenge at a time when the company can hardly afford one, it's clear why the stock is falling today.
