The resale market is on fire, and Rent the Runway is paying attention.
The company is now looking to raise funds through an initial public offering to help boost its standing as a player in the increasingly popular secondhand market — and likely to return value to a spate of its own investors.
Rent the Runway was founded in 2009 as a fashion rental service and recently began selling all products on its website, according to reports, in addition to offering them for rent. The company said in a Monday press release that it “confidentially submitted a draft registration statement on Form S-1 with the Securities and Exchange Commission relating to the proposed initial public offering of its Class A common stock.”
Indeed, now seems like a good time, with stocks trading near all-time highs and the secondhand market poised to more than double in size to $77 billion over the next five years. According to ThredUp’s 2021 Resale Report released in June, in 2020 alone, the secondhand market reached $36 billion, made up of resale goods ($11 billion) and traditional thrift and donation items (at $21 billion). The market is propelled by millennial and Gen Z shoppers, who not only increasingly use digital platforms but also have become more cognizant of their carbon footprints.
And despite Monday’s sharp dips, based largely on rising COVID-19 caseloads, U.S. stock indexes are still trading close to all-time highs, and investors are clearly looking for places to put their money given Tuesday’s rebounds. The Dow Jones Industrial Average recently hit an all-time closing high of 34,996.18 on July 12.
Rent the Runway, which offers over 750 brands for sale or rent including formal items, workwear, casual apparel, handbags and kids wear, among other categories, had a market valuation at around $750,000 last year, but it’s unclear where the company stands now.
The COVID-19 pandemic impacted Rent the Runway, and in March 2020 the company eliminated some positions as it grappled with the unprecedented crisis. It did not specify the number of roles that were slashed.
Last August, the company said it would close units in New York, Washington, D.C., Los Angeles, San Francisco and Chicago and focus on its digital operations. The company also canceled its unlimited subscription model in September.