Rent the Runway Refinements Drive First-quarter Improvements
- Oops!Something went wrong.Please try again later.
- Oops!Something went wrong.Please try again later.
Rent the Runway Inc. wants to help customers get ready in a more intuitive way, and is betting on AI as part of the company’s push toward profitability.
The rental pioneer has been working to build its business by bolstering its offering this year. That means giving subscribers more looks per month, introducing a text-based concierge service, making it easier to rent a complete outfit and more.
More from WWD
First-quarter results suggest the push is gaining traction, with revenues up and the number of active subscribers increasing 7.6 percent to a new high of 145,220.
Now the company is going to be continuing its push to give shoppers more with an AI powered search function that will begin beta testing in the coming weeks.
Call it a look at what comes next, for Rent the Runway and the rest of the industry.
“Fashion as an industry is going to be a massive beneficiary of AI,” said Jennifer Hyman, chief executive officer and cofounder of Rent the Runway, in an interview with WWD.
In particular, Hyman said it can help make the “cumbersome” endless aisle that is fashion online easier to navigate.
“It is the biggest thing to happen to consumer-facing businesses since the launch of the iPhone,” the CEO said. “You’re either going to be a beneficiary of AI as a consumer-facing company or you’re going to die because of AI. Fashion overall is going to benefit.”
And she said Rent the Runway is uniquely positioned to gain from since the service’s users visit the site three or four times a week and the company has a “very large and unique data set” on its shoppers.
The AI search will allow shoppers to go beyond descriptive queries like, “black dress” or “floral print shirt.”
“For the first time, she’s going to be able to search for ‘Clam bake in Nantucket’ or ‘Miami vibes,’” Hyman said. “The AI search that we’re building will enable the customer to shop by how she actually lives. The beta that we’re going to launch is just the beginning for us.”
Rent the Runway’s been working on a lot of new beginnings.
After restructuring and cost cuts last year and the refinancing a key credit facility in January, the company has been investing in its customer experience with an eye toward bolstering its financials.
First-quarter net losses narrowed to $30.1 million from $42.5 million a year earlier. And adjusted earnings before interest, taxes, depreciation and amortization tallied $4.5 million, up from losses of $8.8 million a year earlier.
Adjusted EBITDA margins came in at 6.1 percent, better than the 2 to 3 percent margin Rent the Runway projected in April.
Revenues for the three months ended April 30 increased 10.6 percent to $74.2 million.
The company continues to project subscriber growth of 25-plus percent this year with an almost 50 percent cut in cash consumption.
“The tailwinds for rental have just been growing, there’s increasingly more willingness to rent,” Hyman said. “We have a unique customer base in that she is young and wealthy.”
Rent the Runway is trying to meet them where they are.
“This kind of customer who’s professional, who’s busy — a third of our customers have kids — a lot of the value that she wants from us is saving her time, so many of our strategies are really focused around that.”
While AI is in the near future, one recent update that follows that theme is the text-based concierge service that connects new subscribers to Rent the Runway’s customer service team.
Hyman said the users can text questions on anything — from what to wear for a certain event to how to get a look that doesn’t fit replaced.
“That is game changing,” she said.
Best of WWD
