Designer clothing rental firm saw early gains, but was down at closing
Rent the Runway made its market debut Wednesday way out of the gate, but the designer clothing rental firm’s share price took a steady dive from there.
The company’s initial public offering raised $357 million selling stock at $21 per share, and trading under the symbol RENT on the NASDAQ began nearly 10% higher at $23 per share. The stock price jumped to a high of $24.77 in the morning, but then gradually declined and closed at $19.29.
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But Runway’s $1.2 billion valuation at the closing bell suggests the company has made its way back after taking a severe hit due to the pandemic last year, when its valuation fell to $750 million at one point. The company first hit the $1 billion mark in early 2019.
Rent the Runway was launched in 2008 by co-founders Jenny Fleiss and Jennifer Hyman, who serves as CEO. The company began by renting out designer clothing for special events, and gradually expanded its offerings to include more casual items.
So when COVID-19 hit, the firm’s clients or would-be clients stayed home as events were cancelled. This means that business also suffered a setback.
According to wall street journal, Rent the Runway’s revenue declined nearly 40% in fiscal 2020 to $157.5 million, and customers declined from 133,000 in January to nearly 54,000 by the summer of last year.
Now, Rent the Runway is making a comeback, though most of its customers haven’t returned to the office yet.
“Ninety-nine percent of our customers continue to work from home, and we are back to almost 100% [subscribers] At the end of 2019 we were in business.”