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Online fashion-rental platform Rent the Runway Inc. on Monday announced plans to cut around 24% of corporate staff to cut costs amid “potentially rougher macro conditions,” and shares fell hard in late trading.
In their second-quarter earnings release, Rent the Runway
RENT,
executives described the move as part of a plan to reduce annual operating costs by up to $27 million in fiscal 2023. In response, the company’s leaders raised their annual adjusted-margin outlook, but cut their full-year sales forecast.
“We believe the $25M-$27M in anticipated annualized fixed cost savings we’ve announced help ensure RTR can navigate potentially rougher macro conditions, while also allowing us to significantly improve our medium-term profitability,” according to the announcement.
Rent the Runway executives said they expected to “substantially” complete the restructuring plan by the end of the fourth quarter. The stock sank more than 20% in after-hours trading.
In the second quarter, Rent the Runway recorded quarterly sales of $76.5 million, up 64% from $46.7 million a year ago, while losing $33.9 million, or 53 cents a share. Analysts polled by FactSet expected Rent the Runway to lose 65 cents per share on sales of $73.6 million.
Executives raised their full-year adjusted EBITDA margin forecast to a range of zero to negative 2% of revenue, while reducing their sales guidance to a range of $285 million to $290 million from a forecast of $295 million to $305 million provided in June.
Rent the Runway shares have declined 39.5% so far this year, while the S&P 500 index
SPX,
has fallen 14.7%.
