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RENT

Rent the Runway NasdaqGS:RENT Stock Report

Last Price

US$5.34

Market Cap

US$342.2m

7D

16.6%

1Y

n/a

Updated

08 Aug, 2022

Data

Company Financials +
RENT fundamental analysis
Snowflake Score
Valuation1/6
Future Growth2/6
Past Performance0/6
Financial Health3/6
Dividends0/6

RENT Stock Overview

Rent the Runway, Inc. rents designer wear for women through its stores and online retail.

Rent the Runway Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Rent the Runway
Historical stock prices
Current Share PriceUS$5.34
52 Week HighUS$24.77
52 Week LowUS$2.99
Beta0
1 Month Change36.57%
3 Month Change-4.13%
1 Year Changen/a
3 Year Changen/a
5 Year Changen/a
Change since IPO-72.32%

Recent News & Updates

Jul 21

Rent the Runway: Automation And Technology Support Growing Margins

As the company's gross margins increased to 34.3% in 2021, we believe it could continue to increase its margins as it focuses on investments in RFID and at-home pick. Another factor we believe could drive its margin growth higher is its product acquisition shift towards lower-cost non-wholesale channels. That said, we also believe its margin growth could be threatened by higher SG&A and R&D spending as the company promotes its branding and focuses on improving its platform features. Rent the Runway, Inc. (RENT) is a U.S. e-commerce company that generates subscription revenue by renting out women's designer items. We analyzed the company as its gross profit margin had improved from 9.8% in FY2021 to 34.3% in FY2022. To understand the drivers of its profitability increase, we analyzed its major expenses to determine its profitability outlook which includes fulfillment, Rental Product Depreciation & Revenue Share, SG&A, and R&D. Rent the Runway, Khaveen Investments Declining Fulfillment Expense Positive for Gross Margins Fulfillment Expense ($ mln) 2019 2020 2021 Revenue 256.9 157.5 203.3 Growth % -38.7% 29.1% Fulfillment expense 118.1 53.0 61.9 Growth % -55.1% 16.8% Fulfillment expense as % of Revenue 46.0% 33.7% 30.4% Source: Rent the Runway, Khaveen Investments Based on the company's annual report, its fulfillment expenses consist of fulfillment costs to receive, process and fulfill customer orders, including fulfillment labor payroll and related costs, third-party shipping expenses, cost of packaging materials, cleaning expenses, and other fulfillment related costs. Based on the table above, its fulfillment expense declined (55.1%) in 2020 as its revenue also declined (38.7%) before recovering back to positive growth in 2021 (16.8%) in line with its revenue growth (29.1%). In 2020, its revenue declined due to the decline of its active subscribers by 59% YoY during the pandemic. However, its fulfillment expense as a % of revenue had continuously declined in the past 3 years from 46% in 2019 to 30.4% in 2021. As mentioned by the company's management in its Q1 2022 earnings briefing, the company had focused on technology and automation investments which had led to a more than 30% YoY reduction in non-transportation fulfillment costs. For example, it highlighted the rollout of RFID technology on its products which allows the company to quickly scan its products compared to the past when each item had to be scanned more than 10 to 15 times with bar codes, leading to improved productivity and lower costs. Besides that, as mentioned by the company, the at-home pickup service which is currently in the pilot phase would save on transportation costs versus the customers shipping the items back through third-party courier services. Hence, we believe its fulfillment cost which consists of third-party shipping expenses could continue to decrease due to warehouse improvements and as the company expands its at-home pick-up service to the goal of 50% coverage of its subscribers. As a reminder, at-home pickup is not only more convenient for the consumer but also less expensive for us versus national carriers, thanks to pick up density and consolidation of inbound shipments back to our warehouses. - Jenn Hyman, Chairman, and CEO Overall, we believe that the company's fulfillment expenses as a % of revenue could continue to decrease with its technology and automation investments such as RFID for its logistics process and at-home pick-up service which could be positive for its gross margin growth. Shift Towards Non-Wholesale Channel Could Further Boost Gross Margins Rental Product Depreciation and Revenue Share Expense ($ mln) 2019 2020 2021 Revenue 256.9 157.5 203.3 Growth % -38.7% 29.1% Rental Product Depreciation and Revenue Share expense 85.2 89.0 71.7 Growth % 4.5% -19.4% Rental Product Depreciation and Revenue Share expense as % of Revenue 33.2% 56.5% 35.3% Gross Margin 20.9% 9.8% 34.3% Source: Rent the Runway, Khaveen Investments Besides fulfillment expenses, the company also incurs Rental Product Depreciation and Revenue Share which accounted for 35.3% of revenue, making it its second-largest expense behind SG&A (64.4%). The Rental Product Depreciation and Revenue Share increased in 2020 but decreased in 2021 (-19.4%) which contrasts with its revenue which had a positive growth of 29.1% in 2021. According to the company's management, one of the attributable factors is due to the shift of product acquisition from Wholesale mainly towards non-Wholesale, Exclusive Designs. Wholesale is where the company acquires the products from its brand partners in contrast with its Exclusive Designs channel where the company collaborates with brand partners and manufactures through third-party arrangements. As stated in the company's annual report, the latter has an approximately 50% lower cost compared to retail. Rent the Runway Based on the company's presentation above of its product acquisition, its Share by RTR channel as a % of total items acquired increased in 2020 but decreased in 2021. Whereas Exclusive Designs had increased for both years but still remained the smallest channel among the other 3 channels. Overall, the % of non-wholesale channels had increased from 26% in 2019 to 55% in FY2021. This represents a shift from a 1P model toward 3P by the company which we believe could provide an opportunity for it to increase its margins by merely providing a platform connecting its merchant partners with customers without taking ownership of inventory. From the chart, the company claimed that it had reduced upfront cost per unit by 14% from 2019 to 2021. As mentioned by the company, upfront cost per item is "total upfront spend for items acquired in a period divided by the number of items acquired" and Share by RTR has zero to low upfront cost. Currently, 45% of the product are acquired through Wholesale while 22% is through Exclusive design. However, the company targets to increase its non-wholesale channel share to 67% in the mid-term.

Jun 06

Don't Just Rent The Runway, Buy It

Rent the Runway’s share price has been pummelled since its IPO in October 2021, dropping 80%. An increase in appetite from the American public to socialise, attend events, and return to work will grow the company’s active subscriber base and positively impact their revenue. Sentiment polarity scoring from customers about the company is positively skewed which is reason for further optimism. The market is failing to recognise Rent the Runway’s positive outlook which provides investors with a buying opportunity.

Shareholder Returns

RENTUS Online RetailUS Market
7D16.6%3.3%1.1%
1Yn/a-30.2%-13.0%

Return vs Industry: Insufficient data to determine how RENT performed against the US Online Retail industry.

Return vs Market: Insufficient data to determine how RENT performed against the US Market.

Price Volatility

Is RENT's price volatile compared to industry and market?
RENT volatility
RENT Average Weekly Movement15.0%
Online Retail Industry Average Movement12.9%
Market Average Movement7.9%
10% most volatile stocks in US Market17.1%
10% least volatile stocks in US Market3.2%

Stable Share Price: RENT is more volatile than 75% of US stocks over the past 3 months, typically moving +/- 15% a week.

Volatility Over Time: RENT's weekly volatility (15%) has been stable over the past year, but is still higher than 75% of US stocks.

About the Company

FoundedEmployeesCEOWebsite
20091,027Jenn Hymanhttps://www.renttherunway.com

Rent the Runway, Inc. rents designer wear for women through its stores and online retail. The company offers ready-to-wear, workwear, denim, casual, maternity, outerwear, blouses, knitwear, loungewear, jewelry, handbags, activewear, ski wear, home goods, evening wear, and kids wear, as well as accessories. It also engages in the software development and support activities.

Rent the Runway Fundamentals Summary

How do Rent the Runway's earnings and revenue compare to its market cap?
RENT fundamental statistics
Market CapUS$342.15m
Earnings (TTM)-US$212.00m
Revenue (TTM)US$236.90m

1.4x

P/S Ratio

-1.6x

P/E Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
RENT income statement (TTM)
RevenueUS$236.90m
Cost of RevenueUS$76.00m
Gross ProfitUS$160.90m
Other ExpensesUS$372.90m
Earnings-US$212.00m

Last Reported Earnings

Apr 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)-3.31
Gross Margin67.92%
Net Profit Margin-89.49%
Debt/Equity Ratio783.6%

How did RENT perform over the long term?

See historical performance and comparison
We’ve recently updated our valuation analysis.

Valuation

Is RENT undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

1/6

Valuation Score 1/6

  • Price-To-Sales vs Peers

  • Price-To-Sales vs Industry

  • Price-To-Sales vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for RENT?

Other financial metrics that can be useful for relative valuation.

RENT key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue1.8x
Enterprise Value/EBITDA-6.7x
PEG Ration/a

Price to Sales Ratio vs Peers

How does RENT's PS Ratio compare to its peers?

RENT PS Ratio vs Peers
The above table shows the PS ratio for RENT vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPSEstimated GrowthMarket Cap
Peer Average0.8x
TDUP ThredUp
1.1x19.4%US$297.1m
BARK BARK
0.6x21.7%US$306.8m
UXIN Uxin
1.2xn/aUS$281.5m
DLTH Duluth Holdings
0.5x7.0%US$324.9m
RENT Rent the Runway
1.4x23.0%US$342.2m

Price-To-Sales vs Peers: RENT is expensive based on its Price-To-Sales Ratio (1.4x) compared to the peer average (0.8x).


Price to Earnings Ratio vs Industry

How does RENT's PE Ratio compare vs other companies in the US Online Retail Industry?

Price-To-Sales vs Industry: RENT is expensive based on its Price-To-Sales Ratio (1.4x) compared to the US Online Retail industry average (0.8x)


Price to Sales Ratio vs Fair Ratio

What is RENT's PS Ratio compared to its Fair PS Ratio? This is the expected PS Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

RENT PS Ratio vs Fair Ratio.
Fair Ratio
Current PS Ratio1.4x
Fair PS Ratio2.2x

Price-To-Sales vs Fair Ratio: RENT is good value based on its Price-To-Sales Ratio (1.4x) compared to the estimated Fair Price-To-Sales Ratio (2.2x).


Share Price vs Fair Value

What is the Fair Price of RENT when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: Insufficient data to calculate RENT's fair value for valuation analysis.

Significantly Below Fair Value: Insufficient data to calculate RENT's fair value for valuation analysis.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price, but analysts are not within a statistically confident range of agreement.


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Future Growth

How is Rent the Runway forecast to perform in the next 1 to 3 years based on estimates from 10 analysts?

Future Growth Score

2/6

Future Growth Score 2/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


11.9%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: RENT is forecast to remain unprofitable over the next 3 years.

Earnings vs Market: RENT is forecast to remain unprofitable over the next 3 years.

High Growth Earnings: RENT is forecast to remain unprofitable over the next 3 years.

Revenue vs Market: RENT's revenue (23% per year) is forecast to grow faster than the US market (8% per year).

High Growth Revenue: RENT's revenue (23% per year) is forecast to grow faster than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if RENT's Return on Equity is forecast to be high in 3 years time


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Past Performance

How has Rent the Runway performed over the past 5 years?

Past Performance Score

0/6

Past Performance Score 0/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


-25.1%

Last years earnings growth

Earnings and Revenue History

Quality Earnings: RENT is currently unprofitable.

Growing Profit Margin: RENT is currently unprofitable.


Past Earnings Growth Analysis

Earnings Trend: Insufficient data to determine if RENT's year-on-year earnings growth rate was positive over the past 5 years.

Accelerating Growth: Unable to compare RENT's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: RENT is unprofitable, making it difficult to compare its past year earnings growth to the Online Retail industry (-36.3%).


Return on Equity

High ROE: RENT has a negative Return on Equity (-621.7%), as it is currently unprofitable.


Discover strong past performing companies

Financial Health

How is Rent the Runway's financial position?

Financial Health Score

3/6

Financial Health Score 3/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Stable Cash Runway

  • Forecast Cash Runway

Financial Position Analysis

Short Term Liabilities: RENT's short term assets ($234.8M) exceed its short term liabilities ($74.9M).

Long Term Liabilities: RENT's short term assets ($234.8M) do not cover its long term liabilities ($307.0M).


Debt to Equity History and Analysis

Debt Level: RENT's net debt to equity ratio (141.3%) is considered high.

Reducing Debt: Insufficient data to determine if RENT's debt to equity ratio has reduced over the past 5 years.


Balance Sheet


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: RENT has sufficient cash runway for more than a year based on its current free cash flow.

Forecast Cash Runway: RENT has sufficient cash runway for more than 3 years if free cash flow continues to grow at historical rates of 48.8% each year


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Dividend

What is Rent the Runway current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage

Dividend Yield vs Market

Notable Dividend: Unable to evaluate RENT's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate RENT's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if RENT's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if RENT's dividend payments have been increasing.


Earnings Payout to Shareholders

Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as RENT has not reported any payouts.


Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

2.8yrs

Average management tenure


CEO

Jenn Hyman (41 yo)

13.75yrs

Tenure

US$6,885,895

Compensation

Ms. Jennifer Y. Hyman, also known as Jenn, serves as an Industry Expert at New York Fashion Tech Lab. She co-founded Rent the Runway, Inc. in November 2008 and Chief Executive Officer and Chairman since Ma...


CEO Compensation Analysis

Compensation vs Market: Jenn's total compensation ($USD6.89M) is above average for companies of similar size in the US market ($USD2.70M).

Compensation vs Earnings: Jenn's compensation has increased whilst the company is unprofitable.


Leadership Team

Experienced Management: RENT's management team is considered experienced (2.8 years average tenure).


Board Members

Experienced Board: RENT's board of directors are considered experienced (9.8 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: RENT only recently listed within the past 12 months.


Top Shareholders

Company Information

Rent the Runway, Inc.'s employee growth, exchange listings and data sources


Key Information

  • Name: Rent the Runway, Inc.
  • Ticker: RENT
  • Exchange: NasdaqGS
  • Founded: 2009
  • Industry: Internet and Direct Marketing Retail
  • Sector: Retail
  • Implied Market Cap: US$342.155m
  • Shares outstanding: 64.07m
  • Website: https://www.renttherunway.com

Number of Employees


Location

  • Rent the Runway, Inc.
  • 10 Jay Street
  • Brooklyn
  • New York
  • 11201
  • United States

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/08/08 00:00
End of Day Share Price2022/08/08 00:00
Earnings2022/04/30
Annual Earnings2022/01/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.