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12/09/2021

Rent the Runway posts growing loss despite surging sales

Dan Berthiaume
Senior Editor, Technology
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Rent the Runway
Rent the Runway has issued its first public earnings report.

Rent the Runway’s first-ever quarterly report as a public company contained a mixed bag of results.

The omnichannel fashion rental and resale retailer, which targeted a $1.7 billion valuation with its October 2021 IPO, reported a net loss of $87.8 million for the third quarter of fiscal 2021. This was almost double the net loss of $44.3 million the company accumulated in the third quarter of fiscal 2020.

Net loss as a percentage of revenue was 148.8% as compared to 124.8% in the prior-year quarter. The losses were attributed to one time charges from the IPO.

Not all of the company’s performance results from its first quarter as a public company were negative. Rent the Runway reported revenue of $59 million, a 66% increase year-over-year from $35.5 million in the third quarter of fiscal 2020.

In addition, the company had 116,833 active subscribers (excluding paused subscribers) at the end of the quarter, representing an increase of 78% year-over-year from 65,545 at the end of the third quarter of fiscal 2020. The total for the quarter also representing 87% of Rent the Runway’s active subscriber count at the end of fiscal year 2019 (pre-COVID-19 pandemic).

Rent the Runway also reported 150,075 ending total subscribers, representing an increase of 45% year-over-year from 103,708 at the end of the third quarter of fiscal 2020.

Other highlights the company achieved in the quarter included having 24% of subscribers add one or more paid additional items into their subscription program, increasing the percentage of subscribers outside its top 20 markets to 29% of its base from 23% in fiscal year 2019, enhancing its fit algorithm to drive improvement in fit rate, and introducing at-home pickup in five major metro areas.

For the fiscal fourth quarter 2021, Rent the Runway expects to have ending active subscribers of 121,000 to 122,000 and revenue in the range of $62.8 million to $63.3 million. For the full fiscal year 2021, Rent the Runway expects to have ending active subscribers of 121,000 to 122,000 and revenue in the range of $202 million to $202.5 million.

"We are excited to share our strong third quarter 2021 results and report for the first time as a public company,” said Jennifer Hyman, CEO and co-founder of Rent the Runway. “We delivered significant growth across subscribers and revenue and improved our gross margins. As a leader in clothing subscription and rental with a differentiated operating platform and deep competitive advantages, we believe these metrics are clear indicators of our ongoing business re-acceleration. We are incredibly energized about the opportunity for our Closet in the Cloud and are focused on execution, growing our subscriber base and capitalizing on the major secular trends in our favor including access over ownership, the sustainability of the secondhand economy and financial value.”