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Rent the Runway reports stronger quarterly sales as shoppers look to save money


Jennifer Hyman, Lease the Runway 

Scott Mlyn | CNBC

As some consumers assume twice about purchases, Rent the Runway is getting a bump.

The style rental and subscription firm on Wednesday reported stronger quarterly income that beat expectations and raised its monetary outlook for the 12 months as clients opted to borrow designer garments as a substitute of shopping for them.

Shares have been up about 10% in after-market buying and selling.

In a CNBC interview, CEO Jennifer Hyman mentioned inflation is making Lease the Runway extra interesting to a broader swath of shoppers who lower throughout incomes and geographies.

In the course of the quarter, 28% of its subscribers additionally paid extra so as to add a minimum of one extra rental merchandise every month. Subscribers are charged a payment based mostly on what number of gadgets they borrow every month.

“There is no different place that the patron can go to get as a lot monetary worth as she receives from our providing,” Hyman mentioned.

This is how the corporate did for the third-quarter ended Oct. 31 in comparison with what analysts anticipated, in accordance with Refinitiv:

  • Loss per share: 56 cents vs. 56 cents anticipated
  • Income: $77.4 million vs. $72.9 million anticipated

For the quarter, income rose 31% from a 12 months in the past to $77.4 million. Its loss for the interval narrowed to $36.1 million, down from the lack of $87.8 a 12 months in the past.

Its lively subscribers on the finish of the quarter have been up 15% from a 12 months in the past to 134,240. Complete subscribers rose 17% from a 12 months in the past 176,167.

Lease the Runway now anticipates $72 million to $74 million within the fourth quarter. That vary is larger than the $72 million anticipated by analysts, in accordance with Refinitiv.

For the 12 months, it expects income within the vary of $293 million to $295 million, up from its earlier forecast of $285 million to $290 million.

Lease the Runway is the newest attire enterprise to report earnings, as buyers and economists scour for clues about shoppers’ willingness to maintain spending. Some retailers, corresponding to Walmart and Target, have warned that consumers are shopping for fewer big-ticket and discretionary gadgets — together with much less attire — as inflation drives up the costs of meals, housing and different requirements. Others, corresponding to Macy’s and Best Buy, stood by their steerage, however mentioned consumers have turn into extra picky and fascinated about gross sales.

Lease the Runway’s enterprise and its inventory has been on a turbulent experience, particularly through the pandemic. The rental platform lets clients to join a subscription to borrow clothes and accessories or borrow them a la carte. Its enterprise was damage over the previous two years, as shoppers out of the blue had fewer causes to get out of their sweatpants and placed on work apparel or social gathering outfits.

Since debuting on the stock market last year, shares of Lease the Runway have plummeted. They started buying and selling at $23 a chunk. Its shares closed Wednesday at $1.36.

Lease the Runway can also be nonetheless chasing profitability. It introduced layoffs in September as a part of a cost-cutting plan. It mentioned it might scale back its company headcount by about 24% by the top of the fourth quarter. The plan will quantity to $25 million to $27 million in annual financial savings, the corporate mentioned.

Hyman mentioned Lease the Runway clients aren’t simply trying to economize. Additionally they want extra selection of their wardrobes, as they gown up for work, events and on a regular basis outings once more.

“We’re in an surroundings the place folks do not know what number of days of the week they’ll be going into the workplace, what number of events they’ll be going to, how they’ll be dressing in these events,” she mentioned.

Life adjustments corresponding to being pregnant are inclined to immediate clients to subscribe as effectively, she mentioned, and many ladies are juggling new routines as they emerge from the pandemic.



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