Rent the Runway is currently looking to raise $50 million in venture funding. Why, you ask? Because after five amazing years (or at least that’s how it looked to us) the company affectionately dubbed as the Netflix for evening gowns is deemed as not profitable. YIKES!
After announcing their genius shopping concept to the world in 2009, RTR opened three stores in New York and Las Vegas. Their new subscription based service for accessories, Unlimited seems to be their attempt to “save face” with their investors—who are obviously a bit worried about their multi-million investments.
According to Fortune, the company is currently valued at $220 million and has raised $54.4 million to date.
The company’s service is popular, with five million users who rented $300 million worth of dresses and accessories in the first half of this year, according to the company. Rent the Runway has opened three stores and it is, notably, the country’s largest dry cleaner. But it is not profitable.
In 2013, Rent the Runway generated $28 million, which was 25% lower than internal projections, and lost $14.5 million. In 2012, the company brought in $17.8 million and lost $12.3 million. In 2011, it brought in $10.9 million and lost $5 million.
I was pretty excited when RTR announced their new plus size options last September RTR Plus, but the hype fizzled quickly when those options proved to be underwhelming. What’s even more tragic for the company is that even though the idea of renting a dress is great for red carpets and weddings, the price point is comparable to a designer dress that’s been marked down at TJ Maxx. With more and more designer brands offering budget-friendly options like samples sales and low-end clothing lines, could this be the end for Rent the Runway?
I vote maybe. Let me know what you beauties think by commenting below!