Jennifer Hyman, cofounder, chief executive officer and the force behind Rent the Runway, is feeling pretty good about how the business is shaping up — and is working to win over Wall Street as she seeks to help reinvent fashion.
“2022 is going to be our year,” Hyman told WWD in an interview that touched on fourth-quarter results, the rush in weddings, return-to-work dressing and the company’s path toward positive cash flow.
While the company has been running with net losses for years as it’s built out the rental business, Hyman said it has enough funds available to power it to positive cash flow profitability.
It just needs to keep pushing, using consignment and a collaborative approach with designers to secure product, and push its subscriber base up to 300,000.
That’s still a ways in the future, but having a roadmap is an important part of the journey.
Many investors, it seems, are still deciding if they want to be on that journey. Shares of Rent the Runway slipped 5.6 percent to $5.40 in after-hours trading — down significantly from the company’s $23 IPO price in October.
Hyman said the company is settling in on Wall Street.
“We’re just getting to know it,” the CEO said. “There’s a lot more education that we need to do about this model, how different it is, the unique competitive moats that we’ve built.”
But at least she’s speaking a language Wall Street speaks — money.
“Our number one priority is to drive the business to positive free cash flow profitability,” Hyman said.
She said the company was going to be investing slightly more into operating expenditures and less on capital expenditures because getting inventory to rent has become more efficient.
Rent the Runway’s revenues bounced back strongly for the fourth quarter ended Jan. 31, rising by 91 percent to $64.1 million from $33.5 million despite the Omicron surge. The company’s active subscribers jumped 110 percent to 115,240 while the number of total subscribers tallied 159,544.
Net losses, however, widened slightly, to $39.2 million from $38.8 million a year earlier, and adjusted losses before interest, taxes, depreciation and amortization increased to $5.5 million from $4.3 million.
Hyman said the company has a strong start to this fiscal year and is expecting the rush of weddings and other events as COVID-19 eases will help the company’s occasion business and that the boost there will help convert more of those renters into subscribers.
This year, the company is looking for revenues to grow to a range of $295 million to $305 million, up from $203.3 million last year.
“We really believe that these next few years [will be] the strongest environment for rental that we’ve seen and we’re ready to capitalize on that,” Hyman said.
The wedding boom seen this year means not just a projected 2.6 million weddings, but as many honeymoons, bachelorette parties, rehearsal dinners and so on. And people are also returning to the office.
“The market is getting it completely wrong when they use the word ‘casualization’ of workwear,” said Hyman, referring to the belief that hybrid work has led to more casual styles in the office.
“The office has become way more fashionable than it has ever been before,” she said. “Blazer utilization is up 166 percent year-over-year on Rent the Runway. The traditional pantsuit is dead. Business formalwear in the way we used to do it, that’s never coming back. People are renting outfits for work that they can also wear out to dinner afterward so it’s more fashion-forward and more expressive.”
And so Hyman sees the market coming her way. (On a conference call with analysts, she also pointed to inflation as a competitive advantage for the company since it increases the value of the product subscribers are renting).
“Everything that we have been building for the past decade has kind of culminated in the trends, moment and result that we’re seeing right now,” Hyman said. “We believed 12 years ago that experience was going to be more important than ownership. People are certainly there. People certainly are understanding that 50 percent of their closet is financially wasteful and unsustainable because they just wear it and throw it away.”
Now she just needs to bring the investor set along.
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