ThredUp has officially agreed to divest its European business, Remix, in an effort to focus on its business in the U.S., the company announced Tuesday. 

During its Q2 earnings call in August, CEO James Reinhart noted that the company had European divestment on its roadmap. By the time the company’s Q3 earnings call came along in November, the company said it had made a non-binding agreement to offload Remix. Now, the transaction has been made official.

In its filing with the U.S. Securities and Exchange Commission (SEC) disclosing the details of the deal, the company noted that Florin Filote, ThredUp’s general manager of Europe, is leading the charge on the management buyout.

According to ThredUp’s Dec. 3 Form 8-K filing, Filote paid €1 ($1.05) for 8,100,000 shares of Remix US Holdings, a new entity formed by the transaction. That accounts for 91 percent of the company’s total shares. ThredUp will keep a minority stake in Remix, holding the remaining 9 percent of the company’s shares and has pumped a final investment of $2 million into Remix, which, according to a company release will serve to “help fund operations as Remix continues its fundraising process independently.” 

Remix has issued the resale company a promissory note worth nearly €61.6 million ($64.9 million), plus interest. That sum “reflects [ThredUp’s] investment in Remix since its acquisition to build distribution center infrastructure, enhance the technology platform, hire personnel, engage customers” and more. 

But it’s not as if ThredUp can cash in on that note today; according to the 8-K filing, Remix will be required to pay out the sum in November 2034, or earlier, if it ends up being acquired, filing for an IPO or accepting a third-party investment from a firm that has “the intention to gain long-term strategic benefits” from the transaction. 

ThredUp acquired Remix in 2021 for $28.5 million. At the time, the company had high hopes for the European resale market. Ultimately, Reinhart said, it’s offloading as a chance to look back to home base: the United States. 

“This is a mutually beneficial outcome for both ThredUp and Remix,” he said in a statement. “We are confident that Remix will thrive under Florin Filote’s leadership and the team’s expertise. This transaction will allow ThredUp to focus on our core U.S. business and continue to innovate and evolve our marketplace.”

On the innovation front, Reinhart and team have been eager to keep up with artificial intelligence; earlier this year, the CEO told Sourcing Journal that ThredUp had laid off employees to allow it to go all in on AI. 

Despite its technology-led advancements, the platform reported tough results for Q3 2024, with year-on-year total net revenue down 11 percent for Q3 and U.S. net revenue down 9.6 percent in Q3. Though the company raised guidance for Q4, the information investors gleaned on ThredUp’s call on Nov. 4 sent its stock price tumbling to $0.53—its lowest all year. Over the course of the past month, the stock performance has improved, with Wednesday’s price sitting at $1.70. 

When reporting, Reinhart and Sean Sobers, ThredUp’s chief financial officer, seemed to remain optimistic about what’s ahead. Sobers noted on the call that the team is “looking forward to exiting the year as a U.S.-only business.” 

At the time, Reinhart called the EU business “a distraction” and said that, once the company had the chance to fix its attention solely on the U.S., investors could look forward to seeing better EBITDA, driven by stronger gross margins. 

“Without some of the distraction and the challenges of the EU business, we can make progress faster,” he said in November. “One of the things that was challenging over the past few quarters was we didn’t feel the freedom to invest in the U.S. business as deeply because we still had to manage the cash consumption of the EU business. I think now without that drag and overhead, I think there’s a freeing feeling of, okay, how do we get the U.S. business to grow faster to generate more contribution margin over time.” 

Despite the larger of the two companies turning a page on its time in Europe, Filote said he remains excited about what comes next in the European resale market. 

“We are excited to embark on this new chapter as an independent company,” Filote said in a statement. “We have a strong foundation and a talented team, and we are committed to continuing to provide our customers with a best-in-class resale experience. We believe that this transaction will enable us to accelerate our growth and expand our presence in the European market.”