Rent the Runway Inc. fell after it reported a downbeat outlook for the remainder of the fiscal year and named a new chief financial officer.
For the full fiscal year, the fashion rental company anticipates revenue in the range of $320 million to $330 million, below analysts’ pre-earnings forecast of $345 million. The company expects the number of active subscribers to grow by more than 25 percent.
Raymond James analyst Rick Patel wrote in a research note that the company’s forecast for subscriber growth was “lofty” based on current trends and choppiness in adding new clients last year.
The shares fell as much as 14 percent in New York trading, the most since December.
The weaker outlook for 2023 “is a near-term concern and could reflect a pullback in discretionary spending or an uncertain economic outlook,” Bloomberg Intelligence analyst Poonam Goyal wrote. But “longer-term, we still believe the retailer’s disruptive rental model can help style women more affordably,” she added, citing a third straight quarter of positive earnings before interest, taxes, depreciation and amortisation.
New CFO
Patel said the exit of CFO Scarlett O’Sullivan, who had been in the role for the past eight years, was negative for the company and could weigh on shares. Other analysts, however, highlighted that O’Sullivan is staying on through May 25, which will create continuity.
Sid Thacker, the No. 2 executive in Rent the Runway’s finance department, was named to the CFO role. Rent the Runway hired Thacker about a year ago as a successor candidate to O’Sullivan, chief executive officer Jennifer Hyman said in an interview.
“[Thacker] comes to Rent the Runway after a really incredible 20-plus-year career as a public market investor, which is a fantastic perspective to be bringing into the company at this point in time,” Hyman said. Thacker’s most recent role, according to his LinkedIn account, was at Coalition Investment Partners, which calls itself an alternative asset manager.
Thacker takes the helm of Rent the Runway’s financial department as it eyes profitability and getting back on track after a restructuring last year.
The company’s program to add an extra item to each shipment at no additional cost to subscribers, which it announced in early March, is helping boost the number of people who rent, Hyman said.
“How we bring this business to profitability is by growing,” she said.
By Jeannette Neumann
Learn more:
Rent the Runway’s Long Road Ahead to Profitability
The rental platform’s revenue is up from 2021 — with the number of active subscribers more than doubling — but both figures still remain below pre-pandemic levels.
