Can fashion rental’s restoration carry Rent the Runway to a profitable IPO? – Glossy

Rent the Runway filed for an IPO this week, making it the primary fashion rental firm to go public.

The actual particulars of the IPO weren’t revealed, as the corporate didn’t disclose any info past its press  announcement on Monday.

The transfer comes at an attention-grabbing time for Rent the Runway. Pre-pandemic, the corporate was using excessive. It was valued at over $1 billion in 2019 and had a stable maintain on the fashion rental market. But the corporate misplaced a few of its valuation, dropping right down to  $750 million in May because of the pandemic. Many occasion use instances for Rent the Runway had been canceled because of Covid-19.

But Rent the Runway executives informed Glossy in April that they anticipate an enormous restoration by means of the summer season and fall, fueled by elevated vaccinations and the general public going again to workplaces and occasions. Rent the Runway has already seen a few of that comeback in the previous few months, with gown leases growing each week from January to April.

The return of weddings has performed a giant half in that. Nearly 50% of weddings deliberate for 2020 will occur this yr, in accordance with The Knot. In April, Rent the Runway svp of name and buyer technique Angie Hellman informed Glossy that the corporate could be ramping up advertising to match the restoration of the enterprise.

“Throughout this spring and summer season, we’re growing our advertising spend in tandem with the uptick in optimism and sense of chance we’re seeing from customers because the pandemic dwindles,” Hellman mentioned “We’re engaged on an upcoming model marketing campaign the place we’ll be exploring new paid channels. Word-of-mouth has at all times been a prime acquisition driver for Rent the Runway, so we’re additionally investing in some thrilling developments for our ambassador and referral applications.”

Rent the Runway has skilled rising pains since its founding in 2009. It opened its first of 5 shops in 2014, earlier than saying in August 2020 that it will shut all places. It launched its in style Unlimited enterprise mannequin in 2016, however axed it in September of 2020, through the pandemic. In 2019, it expanded to the children’ and residential decor classes — the latter, by means of a partnership with West Elm. It’s additionally expanded its core girls’s attire providing to classes together with activewear. Rent the Runway was valued at greater than $500 million in 2016.

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Rent the Runway is only one of a number of fashion firms that has filed for an IPO this yr. Authentic Brands Group, which has purchased a number of bankrupt retailers over the past three years, filed on July 7. Luxury fashion home Ermenegildo Zegna adopted, saying its SPAC plans this week. Overall, this summer season seems to be to be among the many busiest IPO seasons the New York Stock Exchange has ever seen, in accordance with Bloomberg.

But the crowded market together with the rise of the Covid-19 Delta variant might make it troublesome for Rent the Runway to draw the cash it desires. The rental market can also be extra crowded than it was when Rent the Runway launched in 2009. Other gamers together with Armoire, Nova Octo and Urban Outfitters’ Nuuly have joined the area within the final two years, together with retailers’ in-house rental companies like Banana Republic’s Style Passport.

But Rent the Runway continues to be a dominant participant within the area. Its $750 million valuation outstrips its rivals. The firm’s success will function a bellwether for the lengths to which rental companies can develop because the market matures.

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