With subscriber growth slowing, fashion rental firm Rent the Runway has begun cutting staff.
The company plans to let go of about 10% of its corporate employees, it said in a Tuesday (Jan. 9) regulatory filing.
That filing also reveals that Chief Operating Officer Anushka Salinas will step down Jan. 31, with Co-founder and CEO Jennifer Hyman set to fill Salinas’ duties.
“The Company expects to incur charges of approximately $3 million to $4 million for the Restructuring Plan, substantially all of which is expected to be incurred in the fourth quarter of fiscal year 2023,” the filing said.
Last month, Rent the Runway released earnings that showed its active subscribers down 2%, along with a slight dip in total subscribers.
“We believe that the sub count is a result of our strategic decisions to hold the line on lower promotions and lower marketing spend to prioritize inventory and stock rates,” Hyman said during an earnings presentation. “In other words, we acquired fewer customers by design, but the customers we have acquired are more profitable.”
However, PYMNTS wrote that the subscriber drop was part of a larger industry trend. The same day that Rent the Runway reported its earnings, apparel subscription platform Stitch Fix announced that its active clients (i.e., customers) declined by 15%, a figure that amounts to 515,000 people, year over year.
“We are building a healthier client base by more precisely targeting high lifetime value clients that we expect will help us expand our client base over time, and … we are developing a long-term strategy to better serve the clients we have today and those we intend to attract in the future,” CEO Matt Baer told analysts.
This trend, that report said, is “somewhat surprising, given that clothing subscribers tend to be loyal to their providers.”
A report by PYMNTS Intelligence and sticky.io, “Subscription Commerce Readiness Report: The Loyalty Factor,” found that the 30% of retail subscribers who are loyalists make up nearly 80% of merchants’ revenue. And 51% of these people prefer subscriptions that include clothing items.
Still, a notable share of clothing subscribers already knew last year that they intended to cancel their memberships thanks to ongoing inflationary challenges. A separate PYMNTS Intelligence/sticky.io report, “Subscription Commerce Conversion Index: Subscribers Seek Affordability and Convenience,” found that a quarter of subscribers said they would cancel their subscription in the next 12 months.
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