Rent the Runway Inc. is seeking a valuation of as much as $1.5 billion in its initial public offering next week, in what would cap a comeback for the clothing rental business.
The New York company is aiming to sell shares for between $18 and $21 apiece for a fully diluted valuation of $1.24 billion to $1.46 billion, it said in a filing on Monday. The roadshow for company management and the underwriters to pitch shares to potential investors begins Tuesday and shares are to be on the Nasdaq Stock Market next Wednesday.
The target range is above the $1 billion firm was valued at in early 2019, before the pandemic eliminated the need for work clothes and eventwear. Born in 2008 by Jenn Hyman and Jenny Fleiss, Rent The Runway began as a shared closet from where women could rent individual things for special events. Covid 19 forced Hyman to let the ranco employees reduce costs by 51% and furlough or lay off half the workforce. The company struggled still. In fiscal 2020, revenues decreased by 39% to $157.5 million. Active subscribers lost $ 54,000 in the summer of 2020 from more than 133,000 as of 31 Jan of that year. This year, however, there has been a rebound as widespread access to Covid-19 vaccinations for some cleared the way for social gatherings and a return to the office for some. The IPO will be closely watched, despite the company's size, given its relatively high profile. The new bond market is operating at a record speed. And investors are watching for signs of whether the year will end on a strong note and whether others planning listings, like Rivian Automotive Inc. will succeed.
Rent The Runway is aiming to capitalize on the growing trend of do-gooder companies, emphasizing how renting clothes instead of purchasing them is better for the environment.