RENT THE RUNWAY, INC
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Rent the Runway, Inc. is engaged in providing shared designer closet platform. It gives customers access to its unlimited closet through its subscription offering (subscription) or the ability to rent a-la-carte through its reserve offering (reserve). It also gives its subscribers and customers the ability to buy its products through its resale offering. Its Closet in the Cloud offers an assortment of items for every occasion, from evening wear and accessories to ready-to-wear, workwear, denim, casual, maternity, outerwear, blouses, knitwear, loungewear, jewelry, handbags, activewear and ski wear. It has built a two-sided discovery engine, which connects customers and differentiated brand partners on a platform built around its brand, data, logistics and technology. Through its platform, it has helped approximately three million lifetime customers discover the transformative of utilizing its Closet in the Cloud across all its offerings. It has approximately 141,205 active subscribers.
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What is Rent the Runway and what does it do?
Hint: it's not about airport runways.
Rent the Runway is an online service that offers customers a way to rent designer dresses, clothing and accessories.
According to the company, it is the “world’s first and largest shared designer closet with approximately 19,000 styles by over 780 brand partners.”
Rent the Runway was founded in 2009 and is based in Brooklyn, New York. It operates only in the United States with over 2.5m loyal customers at this time.
How does Rent the Runway make money?
The company earns and reports revenue in two business segments.
Subscription and Reserve rental revenue
This segment sees revenue from subscriptions that provide customers with access to the company’s “unlimited closet.” It also sees revenue from their “Reserve” offering which allows the “a-la-carte” (individual) rental of clothing and accessories.
In the company’s most recent earnings report, the Subscription and Reserve rental segment accounted for 92% of the company’s revenue.
Other revenue (Resale)
Earnings for this segment come from the sale of products (while still in rental condition) to subscribers and a-la-carte customers. All products are discounted from their retail price. The company calls this their “Resale” offering.
The Resale segment accounted for 8% of revenue in the company’s most recent earnings report.
Is Rent the Runway losing money?
Yes, the company is not profitable at this time and has relied on debt and equity financing since it started in 2009.
COVID-19 has also been difficult. During the pandemic the company has been forced to close all their physical stores (with no plans to reopen them). It has also lost a significant amount of active subscribers, subscription revenue and a-la-carte rental fees.
From FY2020 to FY2021, the company endured a revenue drop of almost 40% from US$256m to US$158m. Its net income dropped over 11% from negative US$153.9m to negative US$171.1m.
The company stated a net loss per share of US$6.72 for the third quarter of FY2021.
Does Rent the Runway stock have a short interest?
Yes. As of March 2022, RENT stock has a short interest of 18.27%. The short interest has increased by 1.61% since February 2022.
Is Rent the Runway stock a buy?
Rent the Runway’s recent negative financial figures have scared off a lot of investors.
Since going public in October 2021, the RENT stock price has fallen over 65% from US$23 to under US$7 in March 2022. In January 2022, Rent the Runway share price hit an all time low of US$4.37.
Overall sentiment is negative at this time. However, some investors believe the company’s stock price will bounce back as the effects of COVID-19 fade away, Americans begin socialising again in greater numbers and earnings climb back to pre-COVID levels.
Who owns RENT stock?
RENT’s biggest owners are institutional, including Bain Capital (13.06%), T. Rowe Price Group (10.06%), Gilder Gagnon Howe & Co. (8.15%) and Highland Capital Partners (8.1%).
Co-founders Jennifer Fleiss and Jennifer Hyman own 1.93% of the company each.
CEO Anushka Salina holds 0.92% of the company.
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This does not constitute financial advice. You should do your own research before making an investment decision. Past performance is not a reliable indication of future performance. No representation is made as to the timeliness, reliability, accuracy or completeness of the market data provided.