Rent the Runway Checks Into Rehab

For Rent

Rent the Runway, the once-buzzy unicorn that promised to democratize couture closets, is staging a financial makeover worthy of a reality show. The company just lopped off more than $240 million in debt, as if it were last season’s sequined jumpsuit, while begging a trio of private equity firms to freshen up its look with a $20 million cash injection.

The deal, stitched together with Aranda Principal Strategies, Story3 Capital Partners, and Nexus Capital Management, gives these investors roughly 86% ownership. Translation: the original shareholders are now holding a very tiny clutch at the equity party. A rights offering will let loyal investors buy a few more shares at $4.08, but considering the stock was circling the drain at $3.77 in April (after being worth two-thirds more just a year ago), it’s not exactly a glam bargain.

CEO Jennifer Hyman is trying to reframe the whole thing as “IPO 2.0.” She insists every financial metric has improved, even while the company was shackled by interest payments piled on like unpaid credit card bills. The alternative was bankruptcy, and let’s just say that doesn’t pair well with cocktail attire. Rent the Runway’s problems began when the pandemic made yoga pants the new little black dress. With nobody renting gowns for weddings or boardrooms, the company deferred interest and watched its debt inflate faster than a puffer jacket at Fashion Week.

Founded in 2009, the company once had a billion-dollar valuation, an IPO in 2021, and a subscriber base north of 147,000. But in true startup-to-public-company fashion, the glow dimmed quickly. A reverse stock split in 2024 was the financial equivalent of Spanx: enough to smooth things out for Nasdaq, but hardly a cure. Revenue in the latest quarter still ‘sagged’ 7.2%, and in fashion, anything that “sags” is not good.

Hyman’s current wardrobe strategy is “asset-light” — meaning Rent the Runway no longer buys all the clothes it rents. Instead, designers can toss their inventory onto the platform for free and split the revenue. It’s basically Airbnb for gowns, with the brands acting as reluctant landlords.

For a company that once symbolized the future of fashion, this latest deal feels less like a runway show and more like a makeover montage. Still, in fashion as in finance, nothing sells like a good comeback story. We hope.