Dive Brief:
- Rent the Runway is launching a restructuring plan that will result in a 10% cut of its corporate workforce, or 37 roles, the company disclosed in a Form 8-K filed with the Securities and Exchange Commission on Monday.
- The designer rental service’s Chief Operating Officer and President Anushka Salinas resigned effective Jan. 31 “in light of the Restructuring Plan,” and will stay with the company in an advisory role until Feb. 29. Rent the Runway CEO Jennifer Hyman was appointed president and designated the company’s principal operating officer.
- The restructuring plan is expected to result in $11 million to $13 million in annualized run rate cash savings, which includes the workforce reduction and open role closures, the filing stated. It excludes the potential hiring of new employees or other additions to the company’s costs and expenses.
Dive Insight:
The move was designed to “focus its workforce and cost structure” toward growth and its profitability goals based on its anticipated budget for its 2024 fiscal year, according to the filing.
A Rent the Runway spokesperson said the company’s new structure is intended to help the business achieve free cash flow and breakeven in its 2024 fiscal year.
Rent the Runway expects to incur $3 million to $4 million in charges due to the plan in the fourth quarter of its fiscal year, per the filing. Of these charges, $2 million to $3 million will come from employee severance and related costs. About $1 million of the charges are expected to include a non-cash impairment charge of company assets.
“The company has worked over the past several years to shore up critical aspects of the customer journey to propel growth in 2024 and beyond, and is now focused on investing more into areas of the business that reignite the growth funnel, including marketing, consumer product, customer experience and more, enabling RTR to capture more of the large and growing rental subscription market,” the spokesperson said in an email to sister publication Fashion Dive.
Rent the Runway most recently released quarterly earnings in December 2023, when it reported revenue of $72.5 million, representing a 6.3% decrease from the same period the prior year. It reported 131,725 active subscribers, representing a decrease of 2% year over year from 134,240, and 175,901 total subscribers, which was roughly flat year over year. It set a record-high subscriber number in its first quarter, reported in June. It hasn’t yet set a date for its Q4 results.
In September, it landed a deal with UPS to reduce its transportation costs. Through that agreement, UPS handles the vast majority of its shipping needs, and Rent the Runway transitioned nearly all of its non-same day outbound shipping and home pick up services to the carrier over the next several months.
