Rent the Runway Lays Off 10 Percent of Corporate Workforce
● President Anushka Salinas has also resigned as the company cuts costs in its push to become “free cash flow break even.”
Rent the Runway Inc. is laying off about 10 percent of its corporate workforce — impacting 37 positions — as it looks to invest in areas that “reignite the growth funnel” and convince Wall Street of its path forward.
Anushka Salinas, chief operating officer and president, also resigned effective Jan. 31 in light of the restructuring.
Investors applauded the move — pushing Rent the Runway's shares up 24.5 percent to 70 cents in midday trading — but with a market capitalization of just $49.2 million, the company still has plenty of work to do to win back Wall Street.
“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,” Rent the Runway said in a statement.
The company said it already has “strong unit economics and high margins” and that the reset is designed to help it become “free cash flow break even” in fiscal 2024.
The restructuring is expected to be mostly completed by the end of the fourth quarter of fiscal 2023 and lead to charges of $3 million to $4 million. Cash savings from the move will tally $11 million to $13 million on an annual basis.
Salinas will stay on as a consultant through Feb. 29 and is also entitled to a $950,000 lump sum payment, before taxes.
Jennifer Hyman, chief executive officer and cofounder, has taken on the additional role of president.
While Rent the Runway pioneered the rental category and has proven able to push through difficult times, including a pandemic that kept people closer to home and in leggings, the firm has had to repeatedly cut back and fine tune during its long march toward profitability.
The company cut 24 percent of its corporate workforce in September 2022 and last year made a bid to give its users more, expanding the number of items that could be rented per month while adding more features to its website.
Last month, Hyman sought to ease investors' balance sheet fears with a refinancing.
“What we're really doing is signaling to the overall market and signaling to our vendor partners, our strategic partners that Rent the Runway is here to stay,” Hyman told WWD at the time.