Rent The Runways Sees Q3 Losses Widen, Stock Tumbles 13 Pct
Rent the Runway (RTR) saw losses widen in the third quarter even though sales were up 66% year-over-year, the company noted in its first financial report since it went public in October this year.
The news sent the company’s stock tumbling by 13 percent in extended trading on Wednesday to nearly $11. Overall, the company’s shares are down nearly 50% since it made its stock exchange debut at $23 per unit, which raised the company’s valuation to $1.7 billion. Since then, the fashion rental startup has seen its market cap shrink by half.
The company saw its net loss for the three-month period that ended October 31 nearly double to $87.8 million, or $6.72 per share. In comparison, the company posted a loss of $44.3 million or $3.98 per share a year before.
The losses came as the company struggled to revive its active subscriber base back to pre-pandemic levels as American consumers are yet to fully resume their pre-pandemic lives. Overall, the company had a total of 150,075 subscribers in Q3, including paused accounts, up 45% year over year.
While the company is seeing subscriber counts return to nearly 90% of pre-pandemic levels in most major metro cities, active subscribers are still low in New York, San Francisco and Washington D.C. — three of the biggest markets for the company. That being said, the company is seeing significant growth in the South and Mountain region, where subscriber activity is now higher than it was before 2019, CNBC reported.
The company is seeking to offer a more convenient and omnichannel experience to its customers as it looks for ways to boost growth. For example, the company now offers an at-home pickup option across five cities, allowing shoppers to easily return their purchases. The strategy is also helping Rent The Runway cut shipping costs.
“It’s less expensive for us than other return methods,” said Chief Executive Jenn Hyman. “It’s a bit of a benefit both for our customer experience and for our fulfillment margins.”
In Q4, the company is reportedly expecting growth in both its active subscriber base and overall sales, with revenue in the $62.8 million to $63.3 million range.
“We saw resiliency despite the fact that the entire year has been impacted by Covid,” said Hyman. “And we believe that our ramp may have even been higher had there been more big events happening — had there been more women returning to offices.”
“So we believe that as the macro environment normalizes, that provides upside for Rent the Runway,” she added.
Originally published at https://retailbum.com on December 9, 2021.
