Hyman, cofounder and chief executive officer of the rental pioneer, told WWD that inflation could help make rental even more attractive if women become more value-conscious as they break loose after two years of the pandemic and catch up on going out.
“Certainly we are part of the overall reopening in the experience economy where women are getting back into the world, they’re going to restaurants, they’re traveling, they’re going back into the office, they’re dating and they’re renting the runway while they’re doing it,” Hyman said.
“Black tie is to 2022 what sweats were to 2020,” she said. “There is a lot of formal inventory being rented. There’s a lot of everyday celebratory looks as well. Utilization of cocktail dresses and black dresses are the highest we’ve ever seen.”
That momentum showed in the company’s first-quarter financials, which registered continuing net losses. But overall, results that were better than projected.
Revenues for the three months ended April 30 doubled from a year ago to $67.1 million, while active subscribers rose 82 percent to a new high of 134,998.
Net losses stood at $42.5 million from the quarter, slightly higher than the $42.3 million seen a year earlier. As a percentage of the top line, losses narrowed, to 63 percent of revenues from 126 percent a year ago. And adjusted losses before interest, taxes, depreciation and amortization tallied $8.8 million.
Hyman is still working to fully explain Rent the Runway and its business model to Wall Street, where the company IPO’d at $23 a share in October, but lately has been trading below $4.
First-quarter results helped the company win back some ground as shares rose 10.2 percent to $3.89 in after-market trading on Thursday.
To help keep some of that momentum, the CEO is looking to keep her promises.
Rent the Runway reiterated its guidance for the year, calling for revenues in the range of $295 million to $305 million, with the target to become breakeven on an adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) basis over the next two to four quarters.
“In this environment that we’re in, I’m executing to build a track record over time and deliver consistent results, prove to Wall Street that we’re doing what we say we’re going to do,” she said.
But there’s still more work to be done to educate people on the business model, she said, pointing to a couple of aspects that she said are underappreciated.
“We monetize our inventory over many years,” she said. “We’ve debunked the myth that things go out of style immediately. What we have learned is that customers care about wearing something that’s new to her every time she comes to Rent the Runway.”
Hyman also said Rent the Runway has a marketing flywheel where users become ambassadors of sorts.
“People come to Rent the Runway to rent extremely bold clothing — some sexy, cutout, red, knock-out number,” she said, noting that when they walk into a room, other women ask where they got that look and they say, Rent the Runway.
“The average customer is now using us for 80 days a year and that means she has 80 occasions to spread the world organically,” Hyman said. “We’re less reliant on paid marketing than most other consumer-facing businesses.”
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