Rent the Runway (RENT) started trading above its IPO price on Wednesday before dipping below that level over the course of the session. Shares closed the session down 8% at $19.29 each. The stock had opened at $23 per share after the fashion rental company priced its debut at $21 each, at the top of its marketed range.
The company raised $357 million in the public offering.
Rent the Runway offers subscribers “the world’s largest shared closet” of over 18,000 styles by more than 750 designer brands. The company says its average customer wears clothes worth more than 20 times than the cost of monthly RTR subscription on an annualized basis.
The pandemic adversely affected the company’s subscriber base and revenue. Total revenue in fiscal year 2020 declined 38.7% to $157.5 million, compared to $256.9 million in the prior year, according to the company's prospectus. Monthly subscriptions, where Rent the Runway sources most of that revenue, have rebounded to some extent.
"Women did not have to return to the office in order to return to Rent the Runway," CEO Jennifer Hyman told Yahoo Finance Live just after the shares began trading. "Ninety percent of our customers continue to work from home, and we're seeing that our total subscriber count is actually back up to 97% of where it was at the end of 2019. So we think that we will continue to scale beyond those 2019 levels."
That said, active subscribers — those who have not paused their subscriptions — have not totally rebounded. They stood at 111,732 as of Sept. 30 of this year, 16 percent below the active subscriber count at the end of 2019 but well above 54,797 at the end of 2020.
Rent the Runway said in August and September of this year, "Approximately 50% of use cases have been more casual in nature — weekend wear, everyday casual occasions, lounge and outerwear — and approximately 50% for work and evening."