New York
Act Daily News
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A recession could also be coming, however customers nonetheless need to look trendy. Subscription clothes service Rent the Runway reported a greater than 30% enhance in gross sales for the third quarter after the closing bell Wednesday.
Shares of Rent the Runway soared 60% on the news. But the corporate continues to be not precisely an image of monetary well being, posting a internet lack of $36.1 million final quarter.
One prime Wall Street analyst was impressed with Rent the Runway’s earnings.
Goldman Sachs analyst Eric Sheridan known as the corporate “the leader in the subscription-based effort to drive the adoption of the sharing economy theme in the apparel sector.” Sheridan reiterated his “buy” ranking on the inventory in addition to his worth goal of $6, which is almost triple the present inventory worth of about $2.18.
But Rent the Runway’s inventory has plunged almost 75% this 12 months, even after accounting for the current positive aspects. The firm introduced a restructuring in September, shedding 24% of its employees within the course of.
“As we pointed out last quarter, the macroeconomic environment remains tough and has had an impact on our business,” mentioned Rent the Runway chief monetary officer Scarlett O’Sullivan on a convention name with analysts Wednesday.
Still, the corporate is longing for a fast turnaround, and Rent the Runway is planning to supply much more clothes out there for hire to its greater than 175,000 subscribers.
“We are choosing to be opportunistic and take advantage of the current retail slowdown to buy attractive inventory from our brand partners at discounted prices,” O’Sullivan mentioned on the convention name.
But Rent the Runway rival Stitch Fix
(SFIX) can also be hurting. The firm reported a bigger-than-expected loss on Tuesday and gross sales that missed forecasts. It additionally introduced layoffs in June. The inventory is down 80% this 12 months, however shares rose 5% Thursday due to the stable Rent the Runway outcomes.