Rent the Runway (RTR), a prominent fashion rental company, has recently announced a significant reduction in its corporate workforce. The decision to cut approximately 10% of its corporate jobs, which translates to 37 employees, is part of a broader restructuring plan aimed at steering the company towards profitability by 2024. This move is expected to generate annualized run rate cash savings between $11 million and $13 million, contributing to the company's financial stability in a challenging economic environment.
The layoffs coincide with the resignation of President and Chief Operating Officer Anushka Salinas, leaving CEO Jennifer Hyman to take on the role of acting principal operating officer. RTR's stock, traded under the ticker symbol RENT on the NASDAQ, saw a slight uptick by 10.23% today following the announcement of the workforce reduction. This development is reflective of a trend where companies are reevaluating their staffing needs in response to high interest rates and persistent inflation concerns.
For investors, RTR presents a potential upside, with analysts giving the company an average price target that suggests an 85.33% increase. The consensus rating for RTR is a Moderate Buy, based on 3 buy ratings and 2 hold ratings, indicating a cautiously optimistic outlook for the company's financial future. Institutional ownership remains strong, with major shareholders such as Bain Capital Venture Investors, LLC, T. Rowe Price Investment Management, Inc., and BlackRock Inc. maintaining significant stakes in the company.
RTR's mission to empower women to feel their best every day remains at the core of its business model, despite the recent workforce adjustments. The company was founded to address the social media-driven desire for varied wardrobes without the need for repeated purchases, offering a sustainable alternative to traditional fashion consumption.
However, changing customer preferences and a shift away from workwear, which now accounts for only about 20% of RTR's business compared to pre-pandemic levels, have necessitated operational changes. As RTR navigates these challenges, it continues to focus on providing a diverse closet that saves time, money, and promotes a more sustainable future for fashion.
