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 will cut its corporate workforce by 10 percent, the company announced in an SEC filing Monday. The reduction will affect 37 employees, and will be implemented by the second quarter of fiscal 2024.
The layoffs are intended to redirect costs toward growing Rent the Runway through marketing, inventory expansion, and customer experience improvements, according to the company.
“This was not a cost-cutting exercise, this was a strategic realignment,” Jennifer Hyman, founder and chief executive of Rent the Runway, told BoF Wednesday.
“We’ve spent the last few years driving the business to profitability, changing the unit economics and margins to make sure that the cost structure of the business is in the right place, that we’re delivering the best customer experiences,” Hyman added. “And now it’s about aligning our road maps and our talent and our resources around [growth].”
ADVERTISEMENT
Rent the Runway is on track to be free cash flow breakeven sometime this year. On the heels of the layoff announcement Monday, its shares have soared more than 60 percent. Still, at 76 cents on Wednesday evening, Rent the Runway’s stock is at risk of being delisted from the Nasdaq.
“As long as we hit our profitability benchmark, that won’t be relevant,” Hyman said.
The restructuring will result in about $11 million to $13 million in annualised cash savings, Rent the Runway said in the SEC report. As part of the filing, the company also announced its president and chief operating officer Anushka Salinas has resigned. In her place, Hyman has been appointed president and the company’s principal operating officer.
Learn more:
Rent the Runway’s Long Road Ahead to Profitability
Consumers have been slow to embrace rental over resale and fast fashion — two cheaper and easier alternatives.
As the German sportswear giant taps surging demand for its Samba and Gazelle sneakers, it’s also taking steps to spread its bets ahead of peak interest.
A profitable, multi-trillion dollar fashion industry populated with brands that generate minimal economic and environmental waste is within our reach, argues Lawrence Lenihan.
RFID technology has made self-checkout far more efficient than traditional scanning kiosks at retailers like Zara and Uniqlo, but the industry at large hesitates to fully embrace the innovation over concerns of theft and customer engagement.
The company has continued to struggle with growing “at scale” and issued a warning in February that revenue may not start increasing again until the fourth quarter.