Rent the Runway has filed its IPO, joining the growing roster of circularity-focused digital brands that have gone public in 2021, including resale platforms Poshmark and ThredUP. Rent the Runway — which allows users to rent, subscribe and buy designer apparel and accessories — plans to list on the NASDAQ under the ticker “RENT.”
The company is moving forward despite the undeniable negative impact of the pandemic. Rent the Runway experienced steep drops in its subscriber base as consumers opted not to refresh their wardrobes.
“We entered 2020 with momentum behind us, poised for continued growth,” said the company’s CEO and Co-founder Jennifer Hyman in a memo included in the SEC filing. “We couldn’t have foreseen the global pandemic and the resulting fight for our survival. Today, Rent the Runway has emerged stronger.”
In 2020, Rent the Runway’s active subscriber base totaled just under 55,000, a sharp decline from the 133,500 in 2019. Revenue followed a similar trajectory last year, dropping to $157.5 million from $256.9 million in 2019. In response, Rent the Runway closed its retail stores, did away with its unlimited subscription plan and launched into resale.
Things have begun to turn around in first half of 2021, with active subscribers in the six months ended July 31 up to nearly 98,000. In that same time frame, the company has lost $84.7 million on revenue of $80.2 million.
However, in its filing Rent the Runway pointed to surging ecommerce activity and increased consumer awareness of sustainability as indicators of its future potential. The company estimated that since 2010, its rental model has displaced production of 1.3 million new garments. Rent the Runway also said it would expand both into new categories and internationally to spur future growth.
“In the decade since I co-founded Rent the Runway, we have seen a monumental shift away from ownership business models and into access and sharing business models,” said Hyman in the filing. “Access models now represent the vast majority of the market in industries like entertainment and music. Rent the Runway has proven that the fashion industry is inevitably ripe for that same disruption, pioneering the access model for retail.”