Why Revolve Group Stock Was Sliding Today

Shares of Revolve Group (NYSE: RVLV) were moving lower today after the online fashion retailer posted results that were roughly in line with expectations but lowered its gross margin guidance for the year.

For an industry under pressure, like the fashion industry, Revolve's results were solid, but the guidance -- as well as slower growth to start the second quarter -- seems to have prompted the sell-off.

As of 1:03 p.m. ET, the stock was down 7.6% on the news.

Image source: Getty Images.

Revolve's struggles continue

Overall, Revolve delivered decent results in the first quarter. Revenue rose 10% to $296.7 million, which slightly missed estimates at $297.8 million.

Gross margin edged down from 52.3% to 52%, but operating income jumped 57% to $14.7 million as the costs around marketing and selling and distribution grew only modestly.

On the bottom line, earnings per share rose $0.15 to $0.16, which beat the consensus by a penny.

Noting uncertainties around the global economy and the trade war, Co-CEO Michael Mente added, "We have consistently outperformed through challenging periods in the past and are entering this current cycle on strong footing, giving us the confidence not just to manage through the near-term challenges, but also to gain further market share and drive long-term gains."

What's next for Revolve

Looking ahead, the company said that net sales in April slowed to mid-single digit growth, but noted stronger performance in the international segment.

For the full year, it cut its gross margin outlook from 52.4%-52.9% to 50%-52%, which is based on the current level of tariffs.

Given that, Revolve could be a winner if the trade war eases. With the stock down more than 50% from its peak late last year, Revolve does have some upside potential if it can overcome the macro headwinds.

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Jeremy Bowman has positions in Revolve Group. The Motley Fool has positions in and recommends Revolve Group. The Motley Fool has a disclosure policy.