Revolve lifts FY26 gross-margin floor to 53.9% as Q3 sales jump 20%

US online fashion retailer Revolve Group has raised the lower end of its fiscal 2026 gross-margin outlook to 53.9 per cent from 53.5 per cent, after a third quarter in which sales grew 20 per cent year on year. The updated range is now 53.9-54.0 per cent.

Net sales reached $356.0 million for the quarter ended September 30, 2026, with gross profit up 19 per cent to $191.8 million. Growth was broad: the REVOLVE segment rose 20 per cent to $306.8 million, FWRD also gained 20 per cent to $49.2 million, US sales climbed 20 per cent to $277.4 million and international sales rose 22 per cent to $78.6 million.

Customers are the story behind the top line. Trailing 12-month active customers grew 18 per cent to 3.2 million, which the company says is its fastest pace in three and a half years. Orders rose 19 per cent to 2.7 million, and a lower return rate helped, though average order value slipped 5 per cent to $292.

Profit, however, told a more cautious tale. Net income fell 27 per cent to $15.5 million, diluted EPS was $0.20 against $0.29 a year earlier, and adjusted EBITDA slipped 7 per cent to $23.5 million. Gross margin itself eased 75 basis points to 53.9 per cent. Marketing spend rose to $50.8 million, or 14.3 per cent of sales, including support for its REVOLVE Los Angeles owned label, while higher shipping rates pushed up selling and distribution costs.

Cash flow was the weak spot: operating cash flow was negative $24.3 million and free cash flow negative $27.0 million, largely on working-capital shifts. Inventory grew 23 per cent to $293.3 million. Still, the company holds $284.6 million in cash and no debt, a solid cushion for its expansion push.

For the full year, Revolve now expects fulfilment costs at 3.3 per cent of net sales, selling and distribution at 17.5 per cent, marketing at 15.9 per cent and general and administrative expenses of $178.0 million, with a tax rate of 25-26 per cent. For investors, the message is that Revolve is trading some near-term profit for faster customer growth, and tightening its margin guidance suggests confidence that the trade-off is under control.

Source: Fibre2Fashion

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