Revolve Group, Inc. RVLV is expanding its use of artificial intelligence (AI) to sharpen pricing, optimize inventory and personalize shopping. Its proprietary technology and data infrastructure are helping teams respond to demand and make faster decisions. New applications in visual search and store analytics could further strengthen customer engagement as the company expands its physical retail presence.
The benefits were evident in second-quarter 2026 gross margin, which rose to 56.6% from 54.1% a year earlier. Although tariff refunds accounted for most of the increase, margin improved approximately 90 basis points excluding that benefit. Management primarily attributed the underlying improvement to AI and data-driven adjustments to markdown algorithms. Net sales climbed 12% to $347.4 million, while trailing 12-month active customers increased 11% to 3.04 million.
Product discovery represents another opportunity. On its second-quarter earnings call, Revolve Group outlined plans to test image-based search, enabling shoppers to upload photographs and find exact items when available or similar merchandise. Management expected the feature to enhance customer engagement and fashion inspiration while laying the groundwork for future shopping improvements.
Behind the scenes, employees can query the company’s data warehouse in plain English, with AI agents delivering insights, reporting and analysis within minutes. Custom algorithms also analyze store visual feeds to track traffic and conversion by store and floor. These capabilities give teams greater visibility into performance and support faster decisions across the business.
Management reiterated its goal of double-digit revenue growth for full-year 2026 and maintained its gross margin outlook of 53.5-54%. The company is balancing AI experimentation with cost controls, including the use of cheaper open-source models for suitable tasks. Continued progress could support operating efficiency and growth, although uncertainty around consumer demand remains.
RVLV’s Price Performance, Valuation & Estimates
Shares of Revolve Group have lost 10.4% over the past three months compared with the industry’s 3.1% decline.
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From a valuation standpoint, RVLV trades at a forward price-to-sales ratio of 1.04, below the industry’s average of 2.20.
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The Zacks Consensus Estimate for Revolve Group’s 2026 earnings implies year-over-year growth of 3.5%, while the same for 2027 indicates an uptick of 23%. Estimates for 2026 and 2027 have remained unchanged over the past 60 days.
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Revolve Group currently carries a Zacks Rank #3 (Hold).
Key Picks
Genesco Inc. GCO is a Nashville-based specialty retailer and branded company. It sells footwear and accessories through retail stores. The company sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Genesco’s current fiscal-year earnings indicates 62.1% growth from the year-ago actual. GCO delivered a trailing four-quarter average earnings surprise of 11.2%.
Designer Brands Inc. DBI designs, produces and retails footwear and accessories. It offers shoes, boots, sandals, sneakers, socks, handbags and accessories. It currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Designer Brands’ current fiscal-year earnings and sales suggests growth of 225% and 0.6%, respectively, from the year-ago actuals. DBI delivered a trailing four-quarter average earnings surprise of 108.1%.
G-III Apparel Group, Ltd. GIII designs, sources, distributes and markets a broad range of apparel and accessories under owned, licensed and private-label brands. The company also holds a Zacks Rank of 2 at present.
The Zacks Consensus Estimate for G-III Apparel’s current fiscal-year earnings and sales suggests a decline of 13.8% and 8.4%, respectively, from the year-ago actuals. GIII delivered a trailing four-quarter average earnings surprise of 1.4%.
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Revolve Group, Inc. (RVLV): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).