Rented clothes are nothing new. Most guys out there have rented a tuxedo for one occasion or another. Expanding this concept, as Rent the Runway (NASDAQ:RENT) did, does make sense. And it’s up in a big way today—over 7%—as Rent the Runway makes a case for itself and a big new market it can readily address.
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Rent the Runway revealed a study noting that 56% of female respondents plan to subscribe to a fashion delivery system within the next five years. That’s an opportunity by any standard, and Rent the Runway plans to be there when said women are ready to make that subscription happen. Plus, Rent the Runway made a move to permanently add one more item to every subscription plan. In some cases, providing more items per shipment may prove more attractive to potential subscribers.
It would be easy to dismiss this out of hand, except for one major point. Rent the Runway now has a competitor in Urban Outfitters’ (NASDAQ:URBN) Nuuly. Nuuly offers up to six pieces a month for $88 per month. It also offers open browsing before signing up, allowing potential subscribers the chance to see what Nuuly has on hand in advance. Nuuly’s differences are drawing attention, even from current and former Rent the Runway subscribers.
Still, it’s going to take some convincing. One place where this is obvious is with hedge funds, which sold 758,800 shares of Rent the Runway last quarter. As a result, their confidence in the stock is currently considered Negative. What’s worse for RENT stock is that hedge funds have been cutting exposure for four consecutive quarters.
