The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
Rent the Runway Inc. slipped in late trading after reporting a net loss in its first quarterly earnings since going public, showing that investors remain skeptical of growth at the fashion-subscription company.
Key Insights
Investors have sold off the shares since Rent the Runway’s initial public offering on ongoing concerns about how much demand there is for fashion rentals in the U.S. There’s also the thorny question of whether Rent the Runway will become profitable anytime soon — the company reported a net loss of almost $88 million in the quarter ended Oct. 31. About half of the loss was attributed to non-recurring items.
Rent the Runway reported 116,833 active subscribers in its fiscal third quarter. That’s 87 percent of what the company had two years ago, before the pandemic struck. It’s also 78 percent higher than a year ago — showing that customers are coming back to the company after the long pandemic pause. The company expects to end the year with 121,000 to 122,000 subscribers.
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The number of active and paused subscribers totalled 150,075. It’s the first quarter that figure has surpassed pre-Covid numbers, Chief Executive Officer Jennifer Hyman said in an interview. Users who have paused their accounts “are a strong signal of short-term growth,” Hyman said. “If you didn’t intend to come back, you would have just canceled.”
Market Reaction
Rent the Runway shares fell 4.8 percent at 4:12 p.m. in late New York trading on Wednesday. The stock has declined 45 percent since the company’s Oct. 26 IPO as of Wednesday’s close.
Editor’s note: Headline, first paragraph and first bullet corrected to remove references to incorrect estimates for fourth-quarter sales.
By Jeannette Neumann
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