Rent the Runway will cut its corporate workforce by 10 percent, the company announced in an SEC filing Monday. The reduction will affect 37 employees, and will be implemented by the second quarter of fiscal 2024.
The layoffs are intended to redirect costs toward growing Rent the Runway through marketing, inventory expansion, and customer experience improvements, according to the company.
“This was not a cost-cutting exercise, this was a strategic realignment,” Jennifer Hyman, founder and chief executive of Rent the Runway, told BoF Wednesday.
“We’ve spent the last few years driving the business to profitability, changing the unit economics and margins to make sure that the cost structure of the business is in the right place, that we’re delivering the best customer experiences,” Hyman added. “And now it’s about aligning our road maps and our talent and our resources around [growth].”
Rent the Runway is on track to be free cash flow breakeven sometime this year. On the heels of the layoff announcement Monday, its shares have soared more than 60 percent. Still, at 76 cents on Wednesday evening, Rent the Runway’s stock is at risk of being delisted from the Nasdaq.
“As long as we hit our profitability benchmark, that won’t be relevant,” Hyman said.
The restructuring will result in about $11 million to $13 million in annualised cash savings, Rent the Runway said in the SEC report. As part of the filing, the company also announced its president and chief operating officer Anushka Salinas has resigned. In her place, Hyman has been appointed president and the company’s principal operating officer.
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