Luxury brands may be suffering but luxe second-hand clothing app poshmark claims lockdown has been good for business. the bay area company, which reported a record week of sales in april, has now restarted plans for an initial public offering. the delayed ipo and poor performance of listed rival the realreal should deter an investor shopping spree.

Backers will point out that preloved clothing is a growing sector. the us apparel market is the largest in the world, with store sales reaching a record $195bn in 2018, says statista. as it grows it pulls the market for second-hand clobber with it, creating a $10bn market in the us, according to research firm ibisworld.

Online companies like vinted and depop in europe and thredup and poshmark in the us offer a version of ebays ecommerce business, facilitating online sales of second-hand clothing and taking a commission. their target is ethically conscious buyers who are both horrified at the 11m tonnes of textiles put into us landfill sites each year and wealthy enough to pay for high-end brands. poshmarks highlighted names include gucci and lululemon. tennis champion serena williams adds a dash of celebrity to its board.

As a private company, most of its finances are hidden in the back of the closet. it claims 60m members but does not provide an active buyer count. in 2017 it was reported to have made a loss on sales of about $150m. the same year it was valued at $625m just over four times trailing sales.

Rising sales mean it will target a higher valuation. but the realreals experience may act as a valuation ceiling. an online/store hybrid, it reported a decline in store demand this year. but it has also suffered the knock-on effect of struggling retailers marking down prices for new clothes. at $1.3bn, the realreal trades at about four times trailing sales. unless poshmark can offer a convincing argument why its resale business is different, it should expect a similar multiple when it finally joins markets.

Lex recommends the fts due diligence newsletter, a curated briefing on the world of mergers and acquisitions. click here to sign up.