While Slit The Runway closed its retail stores due to the pandemic, it still has a network of drop-off locations in major cities, including New York.
Shannon Stapleton | Reuters
In this weekly series, CNBC conveys a look at companies that made the inaugural Disruptor 50 list, 10 years later.
More than 50% of garbing hanging up in someone’s closet is only worn a handful of times before being discarded, according to Rent the Runway CEO Jennifer Hyman.
That’s why she, along with co-founder Jenny Fleiss, started the manner rental and subscription business Rent the Runway in 2009 – a service the company has coined a “closet in the cloud.”
“Providing maids with access … to an unlimited closet and the ability to wear whatever she wants without having to own it, that was really the underpinning of Tear the Runway – this idea that actually there was a better way to have variety in your wardrobe than nothing but buying and throwing away,” Hyman said in an interview with CNBC’s Julia Boorstin in August.
With more than 800 kind partnerships, sizes ranging from 00-22, and three main subscription plans, Rent the Runway’s business unequalled of helping women to stay up-to-date with constantly evolving fashion trends — without breaking the bank or retelling their outfits — found early success. Customers can rent items for as long as they’d like and have the opportunity to purchase any pieces they love. The company estimates that with their eight-item monthly plan, fellows have the opportunity to sport more than $4,000 worth of designer clothing every month for less than $18 per filler.
In its first decade of existence, Rent the Runway says it reached more than 11 million members. It also was favoured to the CNBC Disruptor 50 list five times, most recently ranked No. 5 in 2019.
But with a heavy faith on subscribers renting outfits largely to wear at in-person events and gatherings, the Covid-19 pandemic hit the company hard and it had to total many hard decisions to keep the business going. In 2020, its active subscriber count fell almost 60% to anent 55,000 from about 133,000 the prior year, and it experienced a net loss of $171.1 million compared to its $153.9 million deprivation in 2019.
Rent the Runway slashed costs at the onset of the pandemic. It also rewrote the terms with its suppliers to pivot to a revenue-sharing consignment version, different from its initial wholesale model that required a capital spend upfront without a guaranteed payback. It refitted its membership plans and did away with its unlimited subscription option. It began an expansion into the resale market, countenancing customers to shop its selection and purchase gently used items without having a membership.
Rent the Runway also had to backtrack on its bricks-and-mortar stretching. It opened its first retail store location in New York City in October 2014 and eventually established four additional stocks in major cities across the U.S. After it closed down all retail locations and laid off all retail staff members in Walk 2020 – citing a need to “dramatically reassess” its business model – Rent the Runway announced in August 2020 that it did not scenario to reopen any of its stores in an effort to focus on online innovations and adding more drop boxes where customers could reimbursement clothes.
Its valuation reportedly took a hit during this period too, with a fundraising during the pandemic lowering the start-up lower its previous $1 billion valuation and so-called unicorn status.
But the company bounced back, and Rent the Runway consummated an IPO in October 2021, following a trend of stylish, direct-to-consumer brands — and fellow Disruptor 50 companies — such as Warby Parker, which take a pissed public in the stock offering boom of 2021.
“Because of the fact that we’ve been cooped up for the last two years, we’ve not been be ating holiday parties and weddings and dinners with our friends and vacations,” Hyman told CNBC in the August interview. “I about that there’s even more demand than ever to have those experiences.”

The company reported lately over 124,000 active subscribers, representing 27% growth year over year, and a 64% year-over-year receipts increase in its fiscal 2022 second quarter results, released in September. And with a growing number of in-person upshots now returning, the company sees further growth ahead.
But as quickly as it rebounded, the stock market turned on it and many other late start-ups with growth prospects but little to nothing in the way of profits. After debuting at the top end of its expected range one year ago, the stockpile has fallen nearly 90%.
With its most recent earnings, the company announced a restructuring plan, including cutting 24% of corporate hands and an estimated annual operating expense savings of $25 to $27 million in fiscal 2023.
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Undaunted, Hyman — who was excursioning and unavailable for further comment — is looking ahead, and potentially beyond fashion.
The company is leaning into two tools that Hyman delineated CNBC in August have allowed it to continue to innovate over the past decade since that first looks on the inaugural Disruptor 50 list: access to data and social media.
As a subscription service, Rent the Runway can tap into vast data about how customers are interacting with their clothes after ordering them, something that day in and day out proves difficult for traditional clothing retailers. The company is able to track points like the ways people are polish their items and how the clothing fits them, as well as where they are wearing the items.
Acquiring this information gives Rent the Runway a two-fold advantage – the business is able to provide a personalized, efficient experience to its users, while also benefiting helpful information back to its partners, who can use it while planning future designs. “There is nothing better than giving a bloke an experience in an item,” Hyman said.
The company also encourages its customers to post photos via social media of themselves in their split outfits along with information on their dimensions, creating an open dialogue for consumers to discuss how the clothes fit and how to finest style them. This gives women the chance to decide whether or not they may like a piece of clothing centred on how it fits women of similar sizes. It’s one of Rent the Runway’s “secret sauces,” she said.
The company plans on continuing to use statistics to provide personalized experiences for the consumer as well as create lifelong customers for brand partners, and she hinted in the August sound out at potentially expanding the company’s offerings to brands and products outside of the fashion world. Hyman said 98% of Lease the Runway customers are using the service to try out brands they haven’t previously owned.
“On their own terms, on their own reals, they’re figuring out, do they like those brands? And in many cases, they realize, you know what, they pleasure them and they want to actually become real lifetime consumers of that brand,” Hyman said. “So I think about we’re going to be utilizing our data to … provide a personalized experience to the user, where she can continuously find new products and new brands to try for the opening time.”
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