While resale has had a boom year, rental is having a tougher time. Rent the Runway’s recent financial outlook provides a good example of what’s going on in the sector. Read on to for more on rental, plus details on Boohoo’s recent class action lawsuit, the prevalence of discounting this year and LVMH’s newest acquisition.
Don’t forget to subscribe to the Glossy Podcast for interviews with fashion industry leaders and Week in Review episodes, and the Glossy Beauty Podcast for interviews from the beauty industry. –Danny Parisi, sr. fashion reporter
Rent the Runway struggles as rental becomes competitive
Rent the Runway reported a pessimistic outlook for the rest of the year last week, announcing an expected revenue of $325 million. That was below analysts’ expectation of $345 million, which led to the company’s shares falling by 14% on Thursday, the most they’ve fallen this year.
But RTR expects its subscriber count to grow by 25%, though analysts called this prediction “lofty.”
Rent the Runway was hit hard by the pandemic when few people had any reason to rent clothes for fancy events. The company has slowly clawed its way back, and both its revenue and subscriber counts have grown. They’ve remained below their pre-pandemic levels, however. Meanwhile, rental’s counterpart — resale — has significantly grown over the same timeframe, by almost 100% over the pandemic period. This reflects a more price-conscious consumer’s desire to get more value for their money.
The launch of a bevy of brand-specific rental platforms from H&M and John Lewis, among others, has further put pressure on dedicated rental platforms like RTR and Nuuly. RTR laid off almost a quarter of its staff last year amid a restructuring.
Ad position: web_incontent_pos1
Boohoo settles price inflation lawsuit
U.K. fast fashion retailer Boohoo settled a class action lawsuit last week, agreeing to pay almost $200 million to 9 million customers who jointly alleged that the company artificially inflated its prices.
The lawsuit claims that Boohoo listed clothes at a high price but with a steep discount, even though those clothes had never been sold at the full price point. This gave customers the false impression that they were getting a good deal. Boohoo is paying out its settlement in the form of millions of gift cards, all valued at under $20 each. The settlement is only available to California consumers who bought something from Boohoo or one of its brands between April 2016 and June 2022.
Promotions and discounts are a hot-button issue right now. Consumers feeling economic pressure on their spending power are desperate for a deal. Meanwhile, brands and retailers looking to preserve their margins are trying to cut down on promotions and discounts as much as possible. But discounts inevitably help move inventory, and brands had to embrace them heavily last year as they found themselves saddled with too much product.
LVMH acquires a platinum and jewelry manufacturing company
Ad position: web_incontent_pos2
LVMH continued to build up its vast empire last week with another acquisition: It took a majority stake in Platinum Invest Group, a French jewelry manufacturer. The acquisition will help bolster LVMH’s other recent acquisition, Tiffany & Co., which has already proven to be a valuable addition to the portfolio. LVMH’s watch and jewelry sales grew 11% in the first quarter of the year, and with Tiffany in tow, that sector is likely to continue to shine.
In the most recent episode of the Glossy Week in Review podcast, Glossy dove deeper into LVMH’s recent earnings, including with a look at which categories are performing well for the company. Take a listen to hear more.
