Jennifer Hyman, Rent the Runway
Scott Mlyn | CNBC
As some shoppers think twice about purchases, Rent the Runway is getting a bump.
The style rental and subscription company on Wednesday reported stronger quarterly revenue that beat expectations and raised its financial outlook for the 12 months as customers opted to borrow designer clothes as a substitute of shopping for them.
Shares were up about 23% in after-market trading after closing Wednesday at $1.36.
In a CNBC interview, CEO Jennifer Hyman said inflation is making Rent the Runway more appealing to a broader swath of consumers who cut across incomes and geographies.
In the course of the quarter, 28% of its subscribers also paid more so as to add a minimum of one additional rental item every month. Subscribers are charged a fee based on what number of items they borrow every month.
“There is no other place that the buyer can go to get as much financial value as she receives from our offering,” Hyman said.
Here’s how the corporate did for the third-quarter ended Oct. 31 in comparison with what analysts expected, in response to Refinitiv:
- Loss per share: 56 cents vs. 56 cents expected
- Revenue: $77.4 million vs. $72.9 million expected
For the quarter, revenue rose 31% from a 12 months ago to $77.4 million. Its loss for the period narrowed to $36.1 million, down from the lack of $87.8 a 12 months ago.
Its lively subscribers at the tip of the quarter were up 15% from a 12 months ago to 134,240. Total subscribers rose 17% from a 12 months ago 176,167.
Rent the Runway now anticipates $72 million to $74 million within the fourth quarter. That range is higher than the $72 million anticipated by analysts, in response to Refinitiv.
For the 12 months, it expects revenue within the range of $293 million to $295 million, up from its previous forecast of $285 million to $290 million.
Rent the Runway is the most recent apparel business to report earnings, as investors and economists scour for clues about consumers’ willingness to maintain spending. Some retailers, akin to Walmart and Goal, have warned that shoppers are buying fewer big-ticket and discretionary items — including less apparel — as inflation drives up the costs of food, housing and other necessities. Others, akin to Macy’s and Best Buy, stood by their guidance, but said shoppers have turn into more choosy and curious about sales.
Rent the Runway’s business and its stock has been on a turbulent ride, especially in the course of the pandemic. The rental platform lets customers to join a subscription to borrow clothes and accessories or borrow them a la carte. Its business was hurt over the past two years, as consumers suddenly had fewer reasons to get out of their sweatpants and placed on work attire or party outfits.
Since debuting on the stock market last 12 months, shares of Rent the Runway have plummeted. They began trading at $23 a bit.
Rent the Runway can also be still chasing profitability. It announced layoffs in September as a part of a cost-cutting plan. It said it would cut back its corporate headcount by about 24% by the tip of the fourth quarter. The plan will amount to $25 million to $27 million in annual savings, the corporate said.
The corporate has tested recent approaches to administer its inventory, stand out with its merchandise and work with designer brands. In November, it launched its first celebrity collection with Ashley Park, the co-star of Netflix’s “Emily in Paris.” It launched 4 recent exclusive design brands and is on the right track to supply 18 exclusive design partners this 12 months.
Hyman said Rent the Runway customers usually are not just seeking to get monetary savings. Additionally they need more variety of their wardrobes, as they dress up for work, parties and on a regular basis outings again.
“We’re in an environment where people don’t know the way many days of the week they will be going into the office, what number of occasions they will be going to, how they will be dressing in those occasions,” she said.
Life changes akin to pregnancy are likely to prompt customers to subscribe as well, she said, and plenty of women are juggling recent routines as they emerge from the pandemic.