Rent the Strong Debut Sputters from the track. The stock fell 8%
Rent the track
The initial public offering of its debuted strong on Wednesday, but shares slumped by the end of the day.
Shares of the online clothing rental company (ticker: RENT) closed at $ 19.29, down 8.1% from its opening price of $ 23 per share.
The timing of the IPO is right for the company, CFO Scarlett O’Sullivan said in an interview, as more consumers switch from work-at-home clothing to pre-pandemic clothing.
But some changes made by the retailer, including offering more casual clothing and diversifying its offerings, will remain.
“Our goal is really to keep doing more of what we really do through two strategies,” O’Sullivan said. “Number one, continue to provide our current subscribers with the ability to wear us even more days of the year and number two, continue to increase the number of subscribers.”
International expansion is also on that to-do list, she said, but that’s after the company has accomplished the first two, O’Sullivan said.
O’Sullivan said she did not anticipate any immediate challenges. “Historically we have seen women use us primarily for work clothes for special occasions and last year she was using us for casual wear and lounge wear and things you do when you’re at home. shelter at home, ”O’Sullivan mentioned. “So that use case has persisted this year, and we’re seeing even greater diversification and broadening of use cases. “
The company raised $ 357 million from the sale of 17 million shares, compared to the 15 million it was marketing. The price was expected to be between $ 18 and $ 21.
Goldman Sachs, Morgan Stanley and Barclays are the main underwriters in the transaction.
Launched in 2009 by CEO and co-founder Jennifer Hyman, Rent the Runway said its mission was to “empower women to feel better every day.” The New York-based startup has built the closet in the cloud, where members can rent clothes from 750 designer brands. He buys inventory directly from wholesale designers, on consignment, and designs some items in conjunction with brands, according to his prospectus.
The Covid-19 pandemic forced Rent the Runway last year to close its physical stores. The start-up also laid off 33% of its employees and put an additional 37% on leave in fiscal 2020. The company has not reopened stores, but has physical drop-off points in cities like New York. , Boston, Nashville, Houston and San. Francois.
Due to the drop in demand during the pandemic, Rent the Runway’s total revenue fell almost 39% to $ 157.5 million for the fiscal year ended Jan. 31. The losses extended to $ 171.1 million from $ 153.9 million a year earlier.