Rent the Runway announces recapitalisation plan to reduce debt

Rent the Runway, a leading clothing rental service, has announced a recapitalisation plan aimed at strengthening its financial position and driving future growth. The company reported its financial results for the second fiscal quarter, ending on July 31, 2025, with revenue of 80.9 million dollars, a 2.5 percent increase year-over-year.

The new plan, which is expected to be finalised by December 31, will reduce the company’s debt from 340 million dollars to 120 million dollars and extend its maturity to 2029, giving the company increased financial flexibility.

Despite a quarterly net loss of 26.4 million dollars, Rent the Runway is seeing strong signs that its turnaround strategy is working. The company reported a 13.4 percent year-over-year increase in active subscribers, bringing the total to 146,373. According to CEO and co-founder Jennifer Hyman, customer satisfaction is at a three-year high, and engagement with its new inventory is overperforming across all key metrics.

The company's strategic initiatives include a new inventory strategy, with nearly twice the number of new inventory units added compared to the prior year. This led to a 57 percent year-over-year increase in new units at home. The company has also enhanced the subscription experience with a personalised home screen and a rewards program. Furthermore, a new social media strategy has resulted in an approximate 800 percent increase in overall engagement and a 175 percent increase in views year-over-year.

For the third fiscal quarter, Rent the Runway projects revenue to be between 82 million dollars and 84 million dollars. The company has reiterated its guidance for double-digit growth in active subscribers for the full fiscal year. However, it expects a lower free cash flow, primarily due to costs associated with the recapitalisation. While the company's gross profit and adjusted EBITDA were lower compared to the previous year's second quarter, management remains confident that its strategic efforts will position the company for sustained growth.