Jennifer Hyman, Rent the Catwalk
Scott Mlin | CNBC
As some buyers think twice before buying, rent the track is taking a hit.
The fashion rental and subscription company reported stronger quarterly revenue on Wednesday that beat expectations and raised its financial outlook for the year as customers opted to borrow designer clothes rather than buy them.
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The shares rose 23% in aftermarket trading after closing Wednesday at $1.36.
In an interview with CNBC, CEO Jennifer Hyman said inflation is making Rent the Runway more attractive to a broader swath of customers who cross incomes and geographies.
During the quarter, 28% of their subscribers also paid more to add at least one additional rental item each month. Subscribers are charged a fee based on the number of items they borrow each month.
“There is no other place the consumer can go to get as much financial value as they get from our offering,” Hyman said.
Here’s how the company fared in the third quarter that ended Oct. 31 compared to what analysts were expecting, according to Refinitiv:
Loss per share: 56 cents vs. 56 cents expected Revenue: $77.4 million vs. $72.9 million expected
For the quarter, revenue increased 31% over the prior year to $77.4 million. Its loss for the period narrowed to $36.1 million, down from a loss of $87.8 a year ago.
Its active subscribers at the end of the quarter were up 15% from a year earlier to 134,240. Total subscribers are up 17% from 176,167 a year ago.
Rent the Runway now anticipates $72 million to $74 million in the fourth quarter. That range is higher than the $72 million forecast by analysts, according to Refinitiv.
For the year, it expects revenue in the range of $293 million to $295 million, up from its previous forecast of $285 million to $290 million.
Rent the Runway is the latest clothing business to report earnings as investors and economists search for clues about consumers’ willingness to keep spending. Some retailers, like walmart Y Purpose, They have warned that shoppers are buying fewer big-ticket and discretionary items, including fewer clothes, as inflation drives up prices for food, housing and other necessities. Others, like macy’s Y Best Buyhe maintained his guidance, but said buyers have become more selective and interested in sales.
Rent the Runway’s business and its stock have had a turbulent ride, especially during the pandemic. The rental platform allows customers to sign up for a subscription to borrow clothing and accessories or borrow them a la carte. His business has taken a hit over the past two years, as consumers suddenly had less reason to ditch their sweatpants and put on work or party clothes.
Since its debut on the stock market last year, Rent the Runway shares have plummeted. They started trading at $23 a piece.
Rent the Runway also continues to chase profitability. He announced layoffs in September as part of a cost-cutting plan. He said he would reduce his corporate headcount by about 24% by the end of the fourth quarter. The plan will amount to $25 million to $27 million in annual savings, the company said.
The company has tried new approaches to manage its inventory, stand out with its merchandise, and work with designer brands. In November, she launched her first celebrity collection with Ashley Park, the co-star of Netflix’s “Emily in Paris.” It launched four new designer brands and is on track to offer 18 designer partners this year.
Hyman said Rent the Runway customers aren’t just looking to save money. They also need more variety in their wardrobes as they get back to dressing for work, parties and everyday outings.
“We’re in an environment where people don’t know how many days of the week they’re going to go to the office, how many times they’re going to go, how they’re going to dress on those occasions,” he said.
Life changes like pregnancy also tend to prompt customers to sign up, she said, and many women are juggling new routines as they emerge from the pandemic.
Source: news.google.com