Shares of Turning group (RVLV 32.67%) jumped today after the online fashion retailer reported better-than-expected results in its second-quarter earnings report, showing signs of a possible recovery after several years of disappointing results.

As a result, the stock closed up 32.5% following this news.

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Revolve turns the corner

After five quarters of decline, Revolve returned to revenue growth, but the growth was modest. Revenue rose 3% to $282.5 million, but still above the consensus of $277.2 million.

Revenue in the Revolve segment rose 4% to $245.5 million, while revenue in the Forward segment, the higher-end brand, fell 4% to $36.9 million. International sales were also a bright spot, with revenue up 13% to $57.4 million.

The company continued to deliver strong gross margins of 54%, demonstrating the resilience of its business model. Revolve also managed to reduce operating costs by cutting marketing spend. As a result, operating income doubled from $7.4 million to $16.4 million.

The bottom line is that earnings per share (EPS) rose from $0.10 to $0.21, well above the consensus forecast of $0.13.

Co-CEO Mike Karanikolas said:

I am thrilled with the performance of our team, which resulted in a strong second quarter highlighted by a return to revenue growth and more than doubling of our net income year-over-year. The key drivers of our strong results were significantly improved marketing efficiency and greater efficiency of our logistics costs, supported by the first year-over-year decline in our return rate in more than three years.

Is Revolve on the way to a turnaround?

Revolve’s guidance was limited in its statement, as it only provided an expense forecast and projected gross margin of 52.5 percent to 53 percent for the year. The company also expects full-year operating margin of at least 3 percent.

However, investors seemed more focused on the return to revenue growth and the strong improvement in margins. Revolve stock looks much more affordable after the increase in earnings per share. Although the company still needs to accelerate revenue growth, the business is moving in the right direction and that’s enough to make the stock bounce off recent lows.