Investing.com -- Shares in Rent the Runway Inc (NASDAQ: RENT ) slumped in premarket trading on Thursday as the fashion platform unveiled a weaker-than-anticipated outlook for second-quarter sales due to a planned drawdown in promotional activity to attract new customers.
The New York-based company, which allows users to rent, subscribe or buy designer apparel, said it expects to deliver revenue of $77 million to $79M in its current three-month period. Bloomberg consensus estimates had seen the forecast at $81M.
In a call with analysts, chief financial officer Sid Thacker noted that the business is currently attempting to be "less promotional" with its new customer offer pricing. Thacker explained that this move aims to improve the retention of current clients and place more investment into improving the overall shopping experience.
However, he flagged that this strategy will reduce short-term acquisitions, especially in its lower-priced services.
"As a result, we expect lower ending active subscribers in [the second quarter] versus [the first quarter]," Thacker said.
But Rent the Runway still plans to post ending subscriber growth of more than 25% in its 2023 fiscal year, which Thacker said will be underpinned in part by the extra funding placed into improving its platform. The initiative is expected to ultimately help boost subscriber loyalty, particularly in the second half of the year, he added.
The group remained confident that a strong start to 2023 will also support its annual returns. In the first quarter , revenue jumped by more than a tenth to $74.2M following a 7.6% year-on-year uptick in active subscribers. Both figures beat expectations.
As a result, Rent the Runway's net loss in the three months ended on April 30 narrowed to $30.1M.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.