Why Rent the Runway Stock More Than Doubled in Value Thursday

Shares of Rent the Runway (RENT) more than doubled Thursday after the fashion rental firm gave an upbeat outlook as it benefited from improvements to customer experience, including the use of artificial intelligence (AI).

Chief Financial Officer (CFO) Sid Thacker called fiscal 2024 a “transformative year” for the company, predicting that it will become “a free cash flow breakeven” business. He said, “Importantly, we believe that the cost and capital expenditure decisions that are important components of our free cash flow breakeven plan have already been made.”

Chief Executive Officer (CEO) Jennifer Hyman said that Rent the Runway’s net promoter score (NPS), a metric used to gauge customers’ loyalty, satisfaction, and enthusiasm for a company by asking whether they would recommend a product or company, is now at the highest level in several years, and “customers have been buying more inventory from us, and customer retention has markedly improved year-over-year.”

Hyman said that Rent the Runway made it easier for customers to find the items they wanted with “enhanced discovery features like rental, look, AI, search, new filtering and upgraded photography and styling.” She added that technology and digital product innovations would be a priority for the company this year.

Rent the Runway said it expects full-year revenue growth in the current fiscal year that started Feb. 1 of 1% to 6%, and adjusted EBITDA margin to be 15% to 16%.

Rent the Runway also reported fourth-quarter revenue rose 0.5% to $75.8 million, exceeding estimates. However, its quarterly loss of $7.02 per share was greater than forecasts. 

Rent the Runway shares more than doubled to $19.38 Thursday, hitting their highest level since last September.