Rent the Runway’s First IPO Anniversary Marks Unexpected Pain and Reckoning

One year after its heady $1.7 billion initial public offering (IPO), fashion rental and resale company Rent the Runway is facing a far more humbling reality after its stock has plunged 90% since its debut.

While the entire market and resale category have also suffered, there continues to be high interest and hope for this niche retail segment.

Last week, for example, saw New York City’s original luxury reseller, What Goes Around Comes Around, announce a new digital storefront on Amazon. As PYMNTS noted at the time, it’s a move that instantly transforms the company’s bicoastal presence into a global one, and one that could have major ramifications for customers and rival luxury resellers.

The same week began with eCommerce fashion platform GOAT Group announcing its purchase of apparel reseller Grailed, as the two companies combined their forces amid an anticipated boom in second-hand luxury sales.

Rent the Runway, which went public in October 2021, had good news of its own to report earlier this year. It saw its revenues bloom — and its active subscriber count hit record levels — in the first half of the year as people returned to weddings, social gatherings and travel.

Last month, however, the company announced a restructuring plan that involved reducing its workforce by 24% after a quarter that saw Rent the Runway’s number of active subscribers drop from about 135,000 to 124,000.

During the quarter that ended July 31, the number of paused subscribers rose from 42,000 to 49,000, the company said. Company executives said the dip in subscribers was larger than anticipated, something they attributed to the worsening macroeconomic environment and changes in consumer behavior following the pandemic.

With the restructuring plan, Rent the Runway said it expects to lower its annual operating costs by $25 million to $27 million and has spoken of its goal of removing costs in back-office areas that don’t affect the customer.

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