Rent the Runway hits $1.7bn valuation after shares open at $23

Fashion company Rent the Runway hit a valuation of $1.7 billion (¤1.46 billion) after shares opened at $23, almost 10 per cent higher than the price set in its initial public offering.

The company, which has an office in Galway, sold 17 million shares, raising $357 million in a larger-than-expected sale. The IPO was originally priced at $21, the higher end of its $18-$21 range.

“It’s a milestone in that this is the first female-founded company with an all female management team, [female] CEO, female COO, female CFO ever to take a company public”,” said Anushka Salinas, president and chief operating officer with the company.

“We are poised with a long runway ahead of us for growth, and we are excited about the growth opportunities that we have.”

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Ms Salinas said the increase in the size of the deal showed the confidence that investors have in the business model, with the company making changes in the past 18 months to improve margin structures and capital efficiency.

“We also made improvements and investments in our operations to set us up to be able to serve four times the current subscriber base we have, with almost no investment,” she said. “We can sit here today ready for that growth.”

Alternative

Rent the Runway, which offers a subscription-based alternative to buying expensive garments and accessories by allowing customers to rent them as needed, saw its subscriber base fall during the Covid pandemic. It has since recovered, with figures at the end of September on a par with 97 per cent of the subscriber count the service had at the end of 2019.

The company is also expecting pre-Covid trends, such as sustainable fashion, to continue. “We spent the last 18 months staring at our closet full of clothes that were no longer relevant for our changing lifestyle and what was happening around us,” said Ms Salinas. “Covid accelerated all of those trends and has shined more of a light on the values that a living, breathing closet that moves with you every single day provides to women.”

Rent the Runway opened its first international office in Galway in 2019, saying it would employ up to 150 people within three years. Ms Salinas said it already has 60 staff in place, with strong growth in the past 18 months even as the company was not opening up new roles in other locations. “I think it’s a real testament to our commitment to Galway,” she said.

Goldman Sachs & Co, Morgan Stanley and Barclays are the lead underwriters for the offering.