Rent the Runway Sees Rebound in Subscribers, and Aims to Add More Styles to Keep Them

Wall Street Journal

17-06-2025

Rent the Runway's active-subscriber numbers have rebounded after hitting a multiyear low earlier this year, and the online clothing-rental company is making its largest-ever investment in inventory to keep the momentum going.
The company had over 147,000 active subscribers renting wares from Gucci, Ulla Johnson, Oscar de la Renta and many other labels at the end of its first quarter ended April 30, up nearly 23% from the previous quarter. While the company often sees a surge of subscribers in the late spring just before proms and graduations followed by the June wedding season, its latest count tops first-quarter figures in recent years.
Whether Rent the Runway remains an appealing option will depend in part on whether consumers, some of whom are spending more cautiously, decide that monthly apparel rental fees—ranging from roughly $100 to $315—are worth it. Rent the Runway's finance chief, Sid Thacker, thinks they will, particularly as the company adds to the brands and styles it offers.
'We're providing all of this at tremendous value,' he said. 'Customers are getting thousands of dollars worth of clothing for around $100-plus per month.'
Shoppers several years ago flocked to apparel-rental options, embracing the access to designer clothes for weddings, business meetings and other events without having to shell out hundreds or thousands of dollars. But since the pandemic, the apparel-rental market has taken a hit.
Many consumers still work from home and even within the workplace are dressing more casually. Meanwhile, whipsawing tariff announcements have left some shoppers wary. They also have more rental options, with newer entrants such as Nuuly, launched in 2019 by Urban Outfitters, increasingly capturing shoppers' attention.
For Rent the Runway, the crosscurrents have hit hard. The company's shares plummeted nearly 90% in the year after going public in 2021 and have been down significantly since. The company has also hemorrhaged active subscribers and has yet to turn a profit. Rent the Runway executed a reverse stock split last year to stay listed, while also cutting around $40 million in costs over three years.
But in its latest quarter, the company seemed to shift gears. Along with the record number of active members—subscribers account for nearly 90% of Rent the Runway's revenue—retention was the strongest it has been in four years, Thacker said. And the company was nearly cash-flow break-even in the fiscal year compared with burning around $100 million a few years ago, he said. Revenue in the latest quarter fell 7.2%, to nearly $70 million, compared with a year earlier. By Monday afternoon, Rent the Runway shares were down nearly 40% from the start of this year.
But Thacker expects the positive change to continue.
One reason is inventory. Adding brands and styles holds subscribers' interest, which is why the company plans to double its inventory in this year and add around 90 new labels to its roster of hundreds of brands. Rent the Runway declined to say how much it is investing in inventory.
Rent the Runway has worked to make various designer dresses, skirts and other items easier on the balance sheet. For one, some brands design exclusively for Rent the Runway, wares that tend to come at a significant discount in exchange for access to the company's customers. Some brands also provide inventory at no or minimal cost and then take a share of the revenue when items are rented. Roughly 70% of the company's inventory is expected to fall into one of these two categories in the current fiscal year, up from around 20% in 2019.
And as rental businesses shed some of the stigma that some people associate with wearing used clothing, shoppers are more willing to temporarily freshen up their wardrobe without the expense of a purchase, according to Thacker. Concerns about tariff-driven price increases on clothing, toys and more could add to the appeal of renting apparel, he said.
But analysts question whether stretched consumers will stick with their subscriptions. 'The rental option is interesting in that it affords newness at a reasonable price. But it's not necessarily the most economical,' said Simeon Siegel, a managing director at BMO Capital Markets. 'Plenty of people would say that a stretched consumer will cancel their subscriptions.'
That likelihood increases if tariffs drive subscription prices up, analysts said.
Rent the Runway doesn't have significant direct exposure to tariffs, Thacker said. Its brand partners, however, might have to raise their own prices to offset the levies, which could push up Rent the Runway's costs. Asked if subscription prices would go up as a result, the CFO said: 'We're trying to take care of customers.'
Rent the Runway's efforts to transform the business come as the overall luxury market is struggling, said Herb Blank, chief quantitative analyst at stock-valuation and forecasting firm ValuEngine. The company has a history of losses, and analysts appear to have stopped covering it, an indicator on the company's performance, he said. This month, for instance, no analysts were on the earnings call, compared with two a year ago and eight in June 2023, according to S&P Global Market Intelligence.
ValuEngine stopped covering the company this month.
'For a company that's really under the gun, they are doing everything to try to right the ship,' Blank said. 'It's just … they're swimming upstream.'
Write to Jennifer Williams at [e-mail]