About the Company
REVOLVE is the next generation of fashion retail, seamlessly combining social content with commerce. Their e-commerce platform is known as the ultimate fashion destination for a unique collection of emerging contemporary apparel and beauty brands, where the coveted millennial consumer goes to discover the latest trends. REVOLVE has built a highly engaged, influencer-driven social community, allowing the brand to achieve extraordinary reach with efficient marketing spend. Based in Los Angeles, REVOLVE’s authentic voice and aspirational content resonate with consumers and lead to strong retention and customer acquisition.
Members of our team were already fans and customers of REVOLVE before our investment. We reached out to REVOLVE’s founders directly and initiated conversations about a potential partnership to help the brand accelerate its growth and expands its reach. We were impressed by the founders, Mike Karanikolas and Michael Mente, who are disciplined operators that understand their customers. They had already built the business profitability without taking on outside capital, and were receiving significant interest from potential investors. At the time, they were focused on finding the right partner who could add value to the company’s next stage of growth. Ultimately, they agreed to partner with us given our focus on building innovative brands. The investment was completed in December 2012.
We primarily serve as a strategic partner to the REVOLVE founders and management team, helping them evaluate opportunities to grow the business and scale profitably.
At the outset of the partnership, we collectively determined that developing in-house brands at REVOLVE would be key to long-term value creation. In 2014, we helped with the acquisition of Lovers + Friends, which became the platform to build a margin accretive owned brands portfolio.
In late 2016, REVOLVE launched REVOLVE Beauty, leveraging its powerful social media engine and expert eye for curation to enter the highly attractive beauty category. We drew upon our deep beauty category experience to advise the REVOLVE team on product assortment, visual merchandising, and site content.
Throughout the partnership, we have provided the REVOLVE team with quantitative consumer insights captured through our deep consumer research expertise and helped the REVOLVE team better understand the market, including competitive dynamics and opportunities to differentiate.
TSG also worked closely with REVOLVE’s management team to prepare the company for an initial public offering, which was successfully completed in June 2019.
We have helped drive growth and long-term value by partnering with REVOLVE management across the following initiatives:
Re-launched the REVOLVE website in early 2014 with cutting-edge design and user experience, as well as high-quality content
Developed a margin accretive owned brands platform, which now accounts for 33% of REVOLVE’s net sales across 21 brands, as of the 12-month period ending March 31, 2019
Executed value-based customer segmentation and developed a strategy to define, target, and retain high-value customers to increase lifetime value
Invested in strategic brand marketing, specifically social media, public relations, and influencer relationships, which generates tens of billions of impressions per year, and launched the REVOLVE Social Club in L.A. in 2016
Utilized disciplined, data-driven merchandising strategies, resulting in approximately 79% of net sales at full price in 2018
Further developed localized sites in new countries to drive international growth
Launched REVOLVE Beauty in late 2016
Made key management hires to augment the team
Completed an initial public offering in June 2019
During the course of our investment, REVOLVE has experienced strong topline growth and expanding margins, with net sales and adjusted EBITDA growing at an annual rate of 26% and 121%, respectively, from 2016 to 2018. Key drivers of this performance include:
The owned brands platform, launched in 2014, which now accounts for 33% of REVOLVE’s net sales, as of the 12-month period ending March 31, 2019
Highly efficient investments in customer acquisition and retention that have resulted in consistently strong unit economics, even as the business has scaled to 1.3 million active customers, as of the 12-month period ending March 31, 2019
Scaling over its initial investments in strategic initiatives