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Rent the Runway Targets Valuation of up to $ 1.5 billion at IPO

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Rent the Runway Inc. is looking to value up to $ 1.5 billion in its initial public offering next week, which would cap the return of the clothing rental business.

The New York-based company aims to sell shares at a valuation of around $ 1.3 billion to $ 1.5 billion, it said on Monday in an updated IPO file, according to people. close to the file. The roadshow for the company’s management and its underwriters to introduce the shares to potential investors begins Tuesday and the shares are due to start trading on the Nasdaq stock market next Wednesday.

The target range is above the $ 1 billion the company was valued at in early 2019, before the pandemic largely eliminated the need for work and event clothing. Last year, its valuation fell to around $ 750 million, as offices linked to Covid-19 and other closures caused up to two-thirds of the company’s subscribers to suspend or cancel their memberships.

Founded in 2008 by Jenn Hyman and Jenny Fleiss, Rent the Runway started out as a “shared designer closet” from which women could rent unique items for special events. Since then, it has grown to offer a range of clothing ranging from the chicest to the most casual, and most users are now subscribed to its service which allows them to borrow a certain number of items each month for a flat rate. .

But Covid-19 has forced Ms Hyman, chief executive of Rent the Runway, to cut company costs by 51% and lay off or lay off half of the workforce. It also raised new funding.

The company is still struggling. Revenue declined 39% to $ 157.5 million in fiscal 2020. The number of active subscribers declined to approximately 54,000 in the summer of 2020, from over 133,000 as of January 31. This year. This year, however, there has been a rebound as widespread access to Covid-19 vaccines has paved the way for social gatherings and a return to the office for some. Its number of active subscribers was almost 98,000 at the end of July 2021.

The IPO will be closely watched, despite the size of the company, given its relatively high profile. The new issue market is operating at an all-time high and investors are waiting for signs whether the year will end on a positive note and whether other planned listings, such as Rivian Automotive Inc., will be successful.

Rent the Runway aims to capitalize on the growing trend of “caring” businesses, highlighting how renting clothes instead of buying them is better for the environment.

Write to Corrie Driebusch at [email protected]

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