What: Rent the Runway’s revenue is up from last year, with the number of active subscribers more than doubling, but both figures remain below pre-pandemic levels.

Why is it important: Despite improvement from 2020, Rent the Runway has yet to recover sales and active user count to pre-pandemic levels. Still, the platform expects to break even by the end of next year. Consumers have been slow to embrace rental over resale and fast fashion, two cheaper and easier alternatives.

Rent the Runway reported USD 203.3 million in sales for 2021, up 29% from the previous year, although still below its peak of USD 257 million in 2019. Active, those paying up to USD 149 a month to rent clothes, more than doubled to 115,240, but also remained below 2019 levels. The company fell deeper into the red, reporting a net loss of USD 211.8 million in 2021, compared to USD 157 million in 2019.

Even if there are enough shoppers looking for new outfits on a weekly basis, rental services have faced increased competition from resale sites, which similarly promise an endless wardrobe at a relatively affordable price. Shein and other online fast-fashion retailers offer complete outfits for under $20, cheap enough to be worn once and thrown out.

On a rental service, customers only have access to what’s available, and they must also return every piece they borrow. That means customers are spending hours perusing the website and visiting UPS about to drop off returns.

If Rent the Runway can continue to grow its membership while decreasing its cost of operation, it has a future. Rental can be a nice, niche business, not a billion-dollar business.

Rent the Runway’s journey to profitability