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Rent the Runway Sees Subscribers Rebound From Pandemic’s Depths

The subscription economy is en vogue.

Rent The Runway’s filing with the Securities and Exchange Commission (SEC) for a public listing shows a rebound from the pandemic in terms of subscriber count and active subscribers, through revenue pressures remain in place.

The business model exists as an online platform with monthly subscriptions, with subscribers having ongoing access to the company’s “unlimited closet” or the ability to rent a la carte through the company’s Reserve offering.

Rent the Runway’s SEC filing shows that the positioning of the platform aims to capitalize on a continued shift to online channels, where once brick-and-mortar shopping reigned.

Read more: Rent The Runway Segues Into Resale Market

The company noted in its filing that as many as 80,000 retailers, or 9% of stores, will close their doors through the next five years. Direct to consumer has become an “essential channel” for every brand, said Rent the Runway.

The Financials

Drilling down into the numbers, the subscriber base tallied a bit more than 95,000 in the latest fiscal year, which was down from nearly 147,900 in the previous year. The number of active subscribers declined from more than 133,570 in the fiscal year that ended in January 2020 to just under 54,800 in the January 2021 period.

But in a sign of a rebound from the depths of the pandemic, through the six-month period that ended in July, the company had more than 126,800 total subscribers, where there were more than 97,600 active subscribers.

As for the financials: Revenues for the fiscal year that ended in January declined, from $235.4 million in 2020 to $135.9 million in the most recent year, with an operating loss that deepened slightly in the same period, from $130 million to $130.5 million.

The company said in its filing that it had 18,000 styles and 750 brands available through its “closet in the cloud,” with $16 billion of GMV shipped as of July of this year.

Rent the Runway said in its filing that there has been a marked shift in the economy, where consumers are embracing access rather than ownership. Last year, according to the firm, access models were tied to 64% of the U.S. recorded music market, and as much as 71% of home entertainment. “We believe the apparel industry is ripe for this same disruption,” the company disclosed.

And the numbers show that people want variety in their wardrobe, as the average consumer buys more than 70 items of clothing annually, up from 40 items at the beginning of the 1990s. Online channels are a natural conduit, as U.S. online apparel sales grew at a 17% CAGR between 2015 to 2020.

With a nod to demographics, the company also noted that at the beginning of this year, women made up 47% of the U.S. workforce, and they spend three times as much as their male counterparts on workwear. Secondhand fashion, according to the firm, has “become more mainstream,” where an overwhelming majority of women (91%) have purchased or are open to buying secondhand clothing.

In its risk factors, Rent the Runway said that “many competitors or potential competitors may have longer operating histories, greater brand recognition, existing consumer and supplier relationships and significantly greater financial, marketing and other resources.” The company also stated that “additional competitors are expanding and may continue to expand into the rental and resale space in which we operate, and we remain vulnerable to the marketing power and high level of customer recognition of these larger competitors” — and those competitors might be able to attract Rent the Runway’s customer base.

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