Rent the Runway has filed for an initial public offering on Monday with a revelation that its customer base has dwindled due to COVID but is now on a recovery path. The e-commerce platform that allows users to rent, subscribe, or buy designer apparel and accessories was founded by Jennifer Hyman and Jennifer Fleiss in 2009.
In 2007, Hyman and Fleiss met as section mates at Harvard discussing entrepreneurial ideas, one of which was Rent the Runway. After seeing her sister overspend on an expensive new dress for a wedding, Hyman had the idea of offering dress rentals for women for special events. Long term, her plan was to offer women unlimited access to a designer closet they could rent from on-demand which led to the foundations of the company.
The company got a major boost in 2015 when Venture capitalists poured over $ 400 million and the company has never looked back since then. However, COVID changed it all as sales took a major hit by confining women mostly indoors.
The company’s revenue fell to $157.5 million last year, from $256.9 million in 2019. Its net loss amounted to $171.1 million in 2020, which was wider than the $153.9 million net loss it booked in the prior year.
“We couldn’t have foreseen the global pandemic and the resulting fight for our survival,” said Hyman, its co-founder, and CEO, in a memo included in the mandatory SEC filing. “Today, Rent the Runway has emerged stronger.”
For the six months ending July 31 this year, it lost $84.7 million on revenue of $80.2 million.
The company lists the rapid growth of online shopping and the importance of sustainability as factors playing in its favor. It offers its customers a number of subscription alternatives to lease garments and add-ons from designer models on a regular basis. For illustration, a subscriber could rent eight objects for every thirty-day period at a regular fee of $99 for the very first two months and then $135 for every single month thereafter.
The pandemic posed fresh challenges for the company as it shuttered its existing brick and mortar retail stores format by overhauling its subscription plans. It also launched into the resale market where no membership is required to shop items on its site.
To grow sales in the future, Rent the Runway said, it plans to launch into new categories and expand internationally.
In heading the general public, the company will be part of the likes of Poshmark and Thredup, which also charms its customers into sustainable purchasing. All this comes just as eyeglass retailer Warby Parker went public as a result of a direct listing last week.
Another sustainable shoe brand Allbirds also is treading on the same lines of going public soon.
Goldman Sachs, Morgan Stanley, and Barclays are the lead underwriters for its offering.
The company plans to list on Nasdaq with the ticker symbol “RENT.”
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