Rent the Runway shares fell more than 5% in extended trading Wednesday after the company booked widening third-quarter losses, despite sales that shot up 66% year over year, in its first financial report since going public in late October.
The fashion rental platform’s market capitalization has been nearly cut in half since its public debut, when it fetched a more than $1.7 billion valuation. Shares are down roughly 50% since they started trading at $23 apiece on Oct. 27. On Wednesday, the stock closed down 10% at $11.50.
Among investors’ concerns, Rent the Runway has yet to turn a profit. It didn’t do so in the latest quarter, either, as costs associated with its recent public offering and the repayment of debt weighed on profits. Its active subscriber count has also yet to return to pre-pandemic levels, as Rent the Runway awaits a bigger return among Americans to offices, weddings and concerts in 2022.
Rent the Runway’s net loss for the three-month period ended Oct. 31 nearly doubled to $87.8 million, or $6.72 per share, from a loss of $44.3 million, or $3.98 a share, a year earlier.
Revenue grew 66% to $59 million from $35.5 million.
The company ended the quarter with 116,833 active subscribers, excluding those who have put their memberships on pause, up 78% year over year. Rent the Runway said that accounts for about 87% of the active subscriber base the company had back in 2019.
The company counted 150,075 total subscribers, including paused accounts, in the quarter, which is up 45% year over year.
Rent the Runway said that all major metros in the United States have returned to roughly 90% of their pre-pandemic subscriber counts except for New York, Washington D.C., and San Francisco. It said that markets in the South and Mountain regions of the country are seeing subscriber activity significantly higher than in 2019.
Meantime, it launched an at-home pickup option in five cities, giving shoppers an easier way to return their orders and saving Rent the Runway some money associated with shipping costs, said Chief Executive Jenn Hyman in a Zoom interview.
“It’s less expensive for us than other return methods,” Hyman said. “It’s a bit of a benefit both for our customer experience and for our fulfillment margins.”
For the fourth quarter, Rent the Runway expects active subscribers to be between 121,000 and 122,000, while revenue will range from $62.8 million to $68.3 million.
For the full year, it expects sales to amount to between $202.0 million and $202.5 million.
“We saw resiliency despite the fact that the entire year has been impacted by Covid,” said Hyman. “And we believe that our ramp may have even been higher had there been more big events happening — had there been more women returning to offices.”
“So we believe that as the macro environment normalizes, that provides upside for Rent the Runway,” she added.
Rent the Runway also said Wednesday that it has paid down roughly one-third of its pre-IPO debt balance.
Find the full earnings press release from Rent the Runway here.
This story is developing. Please check back for updates.