On Oct. 4, Rent the Runway—an e-tailer that lets customers borrow high-end fashion, including jewelry—became the latest digitally native brand to file to go public, in what has become a record year for IPOs.
The self-described closet in the cloud plans to trade on Nasdaq under the ticker “RENT.” It has previously been valued at over $1 billion.
Rent the Runway’s registration statement included several numbers that concerned observers, including a falloff in subscribers during the COVID-19 pandemic. At the end of the 2019 fiscal year, the e-tailer had 133,572 active subscribers. By the end of 2020, that number had dropped by more than half, to 54,797. By July 31, 2021, the number of active subscribers had recovered somewhat, to 97,614.
The company has also posted losses for the last two years—including a $153.9 million loss for fiscal 2019, and a $171.1 million loss in fiscal 2020. Revenue totaled $256.9 million in fiscal 2019, but it fell to $157.5 million in fiscal 2020.
In the filing, Rent the Runway admitted that COVID-19 has had a “material adverse impact” on its business, as pandemic restrictions have led to a decrease in special events and an increase in working from home, therefore giving customers less reason to rent clothes.
But the company is counting on a post-pandemic bounce back, when it will be able to return to a “normal operating environment,” it said.
Rent the Runway was launched in 2009, after cofounder, CEO, and chair Jennifer Hyman (pictured), then 29, heard her sister exclaim, “My closet is dead to me.”
“I asked myself, ‘What if the closet were alive?’” Hyman wrote in the registration statement. “What if it could adapt and change with us as our size, mood, and life stage changed?… And what if we didn’t need so much stuff?”
The site has “democratized high-end fashion for women everywhere,” she wrote.
Rent the Runway is generally credited with being one of the first fashion rental sites, eventually spawning jewelry rental sites such as Rocksbox (purchased by Signet), Flont, and Haute Vault, as well as the now-defunct watch rental site Eleven James.
Along the way, Rent the Runway has experimented with retail locations (since closed), drop-off boxes at WeWork and Nordstrom, and in-house brands.
Members of its board of directors include Gwyneth Paltrow, the actress and entrepreneur, and Beth Kaplan, the company’s former president and director of another digital-native company that just went public, Brilliant Earth.
(Photo courtesy of Rent the Runway)
Follow JCK on Instagram: @jckmagazineFollow JCK on Twitter: @jckmagazine
Follow JCK on Facebook: @jckmagazine
