Runway rental (RENT) 4 sq. 2021 loss

Rent the Runway believes that the more than 2 million weddings planned this year and all the parties that go with them will be a huge boon to its business.

In addition, according to co-founder and CEO Jennifer Hyman, Rent the Runway is reaping the benefits of consumers looking for value and stability in times of inflation — Americans are seeing higher gas prices, bigger grocery bills, and even higher price tags on their favorite items. . clothing brands.

Of course, Rent the Runway is also planning a price increase on its membership plans, which will go into effect in early May, to combat its own higher costs.

“We are entering one of the strongest rental environments we have ever seen,” Hyman said in an interview with Zoom. “The inflationary environment is basically a competitive advantage for Rent the Runway.”

The fashion rental platform posted fiscal fourth-quarter earnings ahead of analyst estimates on Wednesday, as well as a narrower-than-expected loss as the company attracted consumers looking to upgrade their wardrobe to adapt to a hybrid work schedule and prepare for spring. and winter. summer social events.

Shares fell nearly 4% after gaining about 10% after hours. Shares are down about 31% year-to-date, bringing Rent the Runway’s valuation to $360 million.

Hyman said Rent the Runway’s business is closely tied to how much consumers spend on experiences, not things. As people travel more, ride Uber around town and make restaurant reservations, Rent the Runway is seeing an increase in user numbers, she said.

Rent the Runway members pay between $94 and $235 each month to receive 4 to 16 different pieces of designer clothing or accessories. Users can add additional items to their plans for an additional fee. They can also make one-time rentals for four to eight days. And Rent the Runway gives customers the opportunity to buy items on their website at a discount up to the full price of the sticker.

The retailer reported a net loss of $39.3 million, or 62 cents per share, for the three-month period ended Jan. 31, compared with a loss of $38.8 million, or 70 cents per share, a year earlier. That’s less than analysts’ estimate of a loss per share of 70 cents, according to a Refinitiv poll.

Revenue rose about 91% to $64.1 million from $33.5 million a year earlier, topping estimates of $63.2 million.

The company’s fourth-quarter gross margin of 36.7% also beat expectations of 27.3% based on a separate StreetAccount survey.

Rent the Runway ended the fourth quarter with 115,240 active subscribers, up 110% from last year. A total of 159,544 followers were counted, including those whose accounts were suspended.

“Fifty percent of our traffic comes from Rent the Runway because [those people] they have an upcoming event or they have an upcoming event,” Hyman said. She added that the company sees this moment in time emerging from the pandemic as an “extremely unique window” to attract new customers and keep them in business longer. term.

For those looking for wedding dresses, for example, Rent the Runway has launched its own wedding concierge service. In its recent marketing, the company positions itself as “a value-driven way to dress for multiple events,” Hyman said.

In the first quarter of fiscal year 2022, Rent the Runway expects sales to be between $63.5 million and $64.5 million, with active subscribers between 130,000 and 132,000. Analysts were expecting $64.3 million in revenue, according to Refinitiv.

The company expects revenue for the year to be between $295 million and $305 million compared to sales of $203.3 million in fiscal 2021. Analysts had forecast revenue of $305 million.

Hyman stressed that in addition to attracting new customers, the company prioritizes achieving profitability, although the exact timeline for achieving this mark remains unclear.

“Profitability is our number one goal,” she said. “And that’s my number one priority as a CEO.”

Find the full financial press release from Rent the Runway here.

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