Rent The Runway Inc (RENT) shares fell sharply Thursday after the high-end clothing rental group posted a wider-than-expected loss in it first financial report as a public company.
Rent said it lost $6.72 per share over the three months ending in October, the group's fiscal third quarter, on revenues of $59 million. Active subscribers to its service, however, were pegged at 116,833, a tally that was only 87% of the levels seen at the end of 2019.
Looking into the final months of its financial year, Rent said its sees revenues rising to between $62.8 and $63.3 million, with active subscribers rising to between 121,000 and 122,000.
"We've been successful at growing and reengaging customers, while we've spun back up our marketing engine," CEO Jennifer Hyman told investors on a conference call late Wednesday. "Looking ahead, we will continue to grow subscribers by leveraging reserve and resale as strong funnel, scaling our full funnel marketing and driving conversion funnel improvements."
"We have a larger presence in many more markets than we did in 2019, and our subscription margins are substantially better," she added. We are excited about the significant opportunity ahead ... we only need to capture a very small share of our opportunity set to be a very large business, and we're confident that our value proposition positions us to capture much more than that over time
Rent the Runway shares were marked 11.8% lower in early trading Thursday to change hands at $10.16 each.
Rent went public on October 27 with an IPO price of $21 per share and a market value of around $1.3 billion. It traded as high as $24.77 on its Nasdaq debut, but has since lost more than $1 billion in value as store re-openings and logistics and supply chain bottlenecks challenge its business model.
"RENT’s solid third quarter results are in line with our framework that it is benefiting from operational improvements as well as a reopening tailwind," said KeyBanc Capital Markets analyst Edward Yruma, who carries an 'overweight' rating with a $21 price target on the stock.
"Seasonality and continued COVID-related conservatism are consistent with our pre-release estimates," he added. "We believe that positive momentum will accelerate in FY22 as return-to-work and special events serve as a tailwind. Strong reactivations point to high product/brand affinity and give us confidence in active subscriber growth."