Rent a runway considers more than 2 million weddings planned for this year, and all the parties that go with it, to be a huge boon to the company’s business.
Plus, according to co-founder and CEO Jennifer Hyman, Rent the Runway is benefiting from consumers’ search for value and stability in times of inflation – with Americans seeing gas prices higher grocery bills, and even more expensive price tags on their favorite clothing brands.
To be sure, Rent the Runway is also planning to raise prices on membership plans that will go into effect in early May, to counter the company’s own higher costs.
“We’re entering one of the strongest rental environments we’ve ever seen,” Hyman said in an interview with Zoom. “The inflationary environment is essentially a competitive advantage for Rent the Runway.”
On Wednesday, the fashion rental platform reported fiscal fourth-quarter revenue ahead of analysts’ estimates along with a narrower-than-expected loss, as the company gained an edge over consumers looking to Refresh their wardrobes to accommodate mixed work schedules and prepare for spring and summer social events.
Shares rose about 6% in after-hours trading.
Hyman says Rent the Runway’s business correlates more closely with how much money consumers are spending on experiences, rather than everything. So as people are traveling more, Uber As she walked around town and made reservations at restaurants, Rent the Runway saw an increase in users, she said.
Rent the Runway members pay a monthly fee of between $94 and $235, to receive between four and 16 different items of clothing or accessories. Users can purchase additional items to their package for an additional fee. They can also make a one-time rental for a period of four to eight days. And Rent the Runway gives customers the option to buy items on their website at a discount up to the full sticker price.
The retailer reported a net loss for the three months ended January 31 of $39.3 million, or 62 cents a share, compared with a loss of $38.8 million, or 70 cents. per share, one year prior. That was 70 cents below analysts’ estimate of a loss-per-share, according to a Refinitiv poll.
Revenue rose about 91% to $64.1 million from $33.5 million a year earlier, topping estimates at $63.2 million.
The company’s fourth-quarter gross margin of 36.7% also beat expectations of 27.3%, based on a separate survey by StreetAccount.
Rent the Runway ended the fourth quarter with 115,240 active subscribers, up 110% from the previous year’s level. It counted a total of 159,544 subscribers, including those whose accounts were suspended.
“Fifty percent of our traffic goes to Rent the Runway because [those people] have an event coming up or they have an occasion coming up,” Hyman said, adding that the company views this timing, coming out of the pandemic, as an “extremely unique window” to get guests new customers and keep them in the business longer than their term.
For instance, to cater to those looking for wedding dresses, Rent the Runway has launched its own wedding concierge service. In its recent marketing, the company is positioning itself as a “value-driven way to dress up multiple events,” Hyman said.
For the first quarter of fiscal 2022, Rent the Runway is expected to post revenue of $63.5 million to $64.5 million, with a total of 130,000 to 132,000 active subscribers. Analysts are looking for $64.3 million in revenue, according to Refinitiv.
For the year, the company expects revenue to be in the $295 million to $305 million range, compared with $203.3 million in revenue in fiscal 2021. Analysts had forecast revenue of 305 millions of dollars.
Find the full financial press release from Rent the Runway this.
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