Fashion Platform Rent the Runway Reports Widening Net Loss as Consumers Slow to Return

Fashion rental platform Rent the Runway saw its shares falling over 13% as it posted broader third-quarter losses, CNBC reported Wednesday (Dec. 8).

This comes even as the company saw its sales up 66% since last year, according to the company’s first financial report since going public in October. The company’s market capitalization has been suffering, with its shares down 50% since then.

Investors are also concerned that the company hasn’t yet turned a profit. CNBC writes that the potential causes range from its costs from going public, as well as debt repayments that have weighed on profits.

Additionally, the active subscriber count hasn’t yet returned to how it was before the pandemic. Rent the Runway is betting that the pandemic’s effects will wane in 2022 as Americans go back to offices, along with events like concerts and weddings.

Rent the Runway said its net loss for the quarter ending on Oct. 31 had almost doubled, hitting $87.8 million, from a loss of $44.3 million — or $3.98 a share — from a year earlier.

The company said its net loss was actually lower year-over-year, excluding the costs from its initial public offering (IPO).

According to the report, Rent the Runway ended its quarter with 116,833 active subscribers. That doesn’t count those which have paused their memberships, which were up 78% year-over-year, which accounts for around 87% of the base from 2019.

There were 150,075 total subscribers, which included paused accounts, and that number was up 45% year-over-year.

PYMNTS writes that Rent the Runway saw sales rebounding through subscribers, although there were still revenue pressures.

See also: Rent the Runway Sees Subscribers Rebound From Pandemic’s Depths

Rent the Runway’s model includes an online platform with monthly subscriptions. Subscribers have access to an “unlimited closet” letting them rent through the Reserve offering.

The filing with the Securities and Exchange Commission (SEC) showed that the platform is looking to capitalize on the digital shift with the pandemic, as opposed to the old ways where brick-and-mortar was the chief way to work.