Luxury rental platform trims 10% of corporate positions to fuel investments in pivotal growth areas
Luxury fashion rental platform, Rent the Runway Inc., is strategically downsizing its corporate workforce, affecting 10 percent or 37 positions, to refocus investments on key areas aimed at reigniting growth. Anushka Salinas, COO and President, has resigned in tandem with the restructuring, effective January 31.
This move received positive reception from investors, propelling Rent the Runway’s shares by 24.5 percent to 70 cents during midday trading. Despite the market response, with a market capitalization of $49.2 million, the company acknowledges the need for continued efforts to regain Wall Street’s confidence.
The company aims to redirect resources into pivotal aspects such as marketing, consumer product development, and customer experience to capture a larger share of the expanding rental subscription market. Rent the Runway emphasizes existing strong unit economics and high margins, and the restructuring is geared towards achieving “free cash flow break-even” in fiscal 2024.
The restructuring process, expected to conclude by the end of the fourth quarter of fiscal 2023, will incur charges of $3 million to $4 million but is anticipated to yield annual cash savings of $11 million to $13 million. Anushka Salinas will act as a consultant until February 29, receiving a lump sum payment of $950,000 (pre-tax).
Rent the Runway’s CEO and co-founder, Jennifer Hyman, assumes the additional role of president amidst these changes. While the company pioneered the rental category and demonstrated resilience through challenges, it has undergone multiple adjustments to streamline operations and enhance profitability, including a 24 percent reduction in corporate workforce in September 2022.
Last year, Rent the Runway expanded its offerings to users and sought to allay balance sheet concerns with a refinancing initiative. CEO Jennifer Hyman emphasizes the company’s commitment to long-term viability and its enduring presence in the market.
Photo | Ajay Suresh