Rent the Runway shares plummeted more than 22% in pre-market trading on Friday after the designer apparel and accessories rental platform reported a revenue miss for the second quarter and slashed its full-year sales outlook.
For the quarter that ended July 31, 2023, the company reported revenue of $75.7 million, down 1% year-over-year from $76.5 million and below the Wall Street estimate of $78.5 million.
For fiscal 2023, it now expects revenue of at least $296.4 million, matching its fiscal year 2022 revenue, compared to its prior expectation of revenue in the range of $320 to $330 million.
It removed its previous 25% subscriber growth forecast and expectation of a year-over-year reduction in cash consumption by almost 50%, instead projecting negative free cash flow in the range of $50 to $53 million for fiscal 2023.
Rent the Runway said it expects to achieve free cash flow breakeven, before cash interest expense, in the 2024 financial year.
“We believe that a key part of achieving our profitability milestone is prioritizing the medium and long-term health of the business over short-term revenue gains and lower margin customers,” Rent the Runway CEO Jennifer Hyman said.
On a positive note, for 2Q Rent the Runway narrowed its net loss year-over-year from $33.9 million, or a loss per share of $0.53, to $26.8 million, or a loss per share of $0.40.
Analysts had forecast a loss per share of $0.43, according to Zacks Consensus Estimate.
Rent the Runway stock had shed 22.1% at US$1.06 before the opening bell.
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