Rent The Runway Shares Sink As Inflation-Weary Subscribers Hit Pause

Rent the Runway shares sink as inflation-weary subscribers hit pause

Shares of Rent the Runway plunged greater than 22 per cent earlier than the Wall Street bell on Tuesday, as extra Americans paused their subscription to the clothes rental agency as they really feel the pinch of red-hot inflation.

Soaring costs of gasoline and groceries have compelled customers to curb spending on attire and different discretionary gadgets, bruising gross sales of clothes corporations that had been simply starting to get better from pandemic lows amid easing provide chain points.

Rent the Runway lowered its annual gross sales forecast late on Monday and mentioned it will minimize about 24% of its company workforce because it seeks to rein in prices.

“Consumers aren’t viewing (Rent the Runway) as a way to save money versus a traditional wardrobe ownership model…rather, consumers are protecting household budgets by crossing off recurring monthly discretionary charges like RENT,” Credit Suisse analyst Michael Binetti wrote in a word.

At least 5 brokerages minimize their worth targets on the inventory, with Credit Suisse downgrading its score to “neutral” from “outperform”.

Rent the Runway reported 124,131 energetic subscribers on the finish of the second-quarter, down 8 per cent from the prior three-month interval, with the corporate blaming a rise within the variety of individuals pausing or selecting to not renew their subscription.

Active subscribers had been nonetheless up 27 per cent in comparison with a 12 months earlier.

The firm mentioned whereas it noticed subscriber numbers bounce again in August and September, it was nonetheless tough to foretell how customers would behave given an unsure macro backdrop.

“It is becoming clear to us that our customers live, work, socialize and travel differently in 2022 than they did prior to the pandemic,” Chief Executive Jennifer Hyman mentioned on a name with analysts.

“We are still learning how these types of changes in customer behavior impact the business, particularly in a challenging macro environment.”

The firm’s shares had been down 22.9 per cent at $3.80 premarket. They have a median worth goal of $8.50, in response to Refinitiv knowledge.

(Except for the headline, this story has not been edited by NDTV employees and is printed from a syndicated feed.)

Source link

Leave a Reply

Your email address will not be published.