As America’s white-collar employees start working from the office again, they’re trying to dress the part.
Rent the Runway, the service that lets subscribers borrow clothes for a fee, has been struggling with growth. Revenue and profits, which both came in Tuesday (Dec. 5) below analyst expectations at $72.5 million and $3.5 million, respectively, have stalled in their growth for more than a year. But as the return-to-office pilgrimage intensifies, the company expects that it will get back to its its pre-pandemic upward trajectory.
“We started to see that last quarter,” said CEO Jennifer Hyman on the company’s earnings call. “It has continued to accelerate, which to us is really just what the pre-COVID Rent the Runway behavior was, where women utilized our service throughout the year to get dressed for work in addition to her everyday life and special occasions.”
It’s not clear exactly what the future holds for return-to-office, though many employers are definitely settled on its reintegration. Stanford economist Nick Bloom recently wrote in the New York Times that the slowing trickle of workers renewing their commutes means return-to-office is “dead,” and commercial real estate vacancy rates are at 20-year highs. But the people who do happen to be making their way into the office want something new to wear. Hyman told investors that “workwear” selections by the company’s 176,000 subscribers were up 10% over last year.
Rent the Runway, which was founded in 2009 and spent its early years as a disruptive corporate darling, went public in 2021. Despite the damper that the pandemic put on consumer spending, investors were impressed that the company was able to claw its way back into its customers wallets, and shares popped 10% on the first day of trading. Since then, the stock price has been in a yearslong skid, with shares currently down 97% from the IPO price. Last year, Rent the Runway announced a restructuring plan that included laying off nearly 1 in 4 of its corporate employees.
Wall Street wasn’t quite convinced that the future is bright for the company, as shares were down 11% in Wednesday (Dec. 6) trading.