Daily Brief: Poshmark Has A New Home... With South Korean Internet Company Naver

Daily Brief: Poshmark Has A New Home... With South Korean Internet Company Naver

over 1 year ago3 mins

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Naver, South Korea’s biggest internet company, announced this week that it’s buying US clothing reseller Poshmark in a deal worth $1.2 billion.

What does this mean?

The US online second-hand fashion market's worth a healthy $80 billion at the moment, but it's predicted to hit a massive $130 billion by 2025. And with that hefty twelve-figure forecast, it’s no surprise that it’s attracting overseas attention. Just look at Naver: South Korea’s biggest internet company is buying US second-hand fashion marketplace Poshmark at nearly $18 a share – a whole 15% more than what they were worth before the deal was announced. The acquisition is Naver’s biggest ever and reveals the company’s commitment to becoming a global player in the online fashion space: its ambitious plan involves enriching Poshmark’s social shopping platform – which boasts an 80 million-strong customer base – with new live-streaming features that are popular in Asia. And at the same time, it’ll give Poshmark access to Naver’s vast ecommerce experience, while letting the platform continue to operate independently.

Why should I care?

For markets: Dangerous liaison.

It seems investors weren’t sold on Naver’s grand plan. In the wake of the news, the company’s shares hit a low they haven’t seen since April 2020 – and not without reason. After all, Poshmark’s stock price has been in near-constant freefall since it went public last year, and the fact it’s likely to post a $70-million loss this year hardly screams “Buy me!”. All in all, then, Naver’s going to have to put its shoulder to the grindstone if it hopes to turn this deal to its advantage.

Poshmark stock

Zooming out: Dressing down.

With the global economy faltering and ecommerce growth going slack, circumstances seem to be set against Naver. Look at fashion retailer Boohoo: last week the company reported its first ever drop in sales in the first half of the year – and with cash-strapped consumers skimping on fashion sense in favor of financial sense, the company found itself forced to slash profit predictions for the rest of 2022 too.

Keep reading for our next story...

Greggs Gets That Bread

Greggs image

The British bakery chain Greggs reported strong quarterly sales on Tuesday.

What does this mean?

Even if the only economic information you possessed was a price history of Greggs’ famous flakey sausage rolls, you’d still be able to tell that inflation has hit the British economy pretty hard. Rising from £1 a pop in December to £1.10 in May, and selling today at a cool £1.15 ($1.32), Greggs’ most popular offering has kept pace with rising costs – but that hasn’t discouraged hungry customers in the least. The company reported that sales grew a tantalizing 15% last quarter versus the same time last year, even though prices across its range have increased around 9% since the year began. And the baker’s growth came as something of a cakewalk despite broader gloom in the industry, with its low-priced offerings making it well suited to an atmosphere of increased frugality. Investors, seeing that the proof was in the pudding, sent Greggs’ shares up by 10%.

Greggs stock
Source: Google Finance

Why should I care?

Zooming in: Not loafing about.

In analysts’ eyes, Greggs’ update displayed more green flags than a St Patrick’s Day parade in New York. And as customers swap pricey lunches for Greggs’ cheap and cheerful menu, the chain could be set to win even more customers. And you better believe it’s preparing to cater to them: the company’s opened 106 stores so far this year, and is on track to hit 150 before the year’s out.

The bigger picture: Every pound counts.

There’s good reason to think Brits are going to be “trading down” for cheaper options in the coming months: data out last week showed that credit card spending in the UK has gone through the roof, with total balances now at a whopping £5.9 billion. Economists suspect that means people are using their cards just to pay for necessities like food – suggesting Brits are seriously struggling to make ends meet.

UK credit card spending
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