Rent the Runway 2026 Q1 Earnings Misses Targets as Net Loss Widens 18.6%

Rent the Runway (RENT) reported its fiscal 2026 Q1 earnings on June 6th, 2025. The company missed expectations, with revenue declining by 6.2% compared to the same quarter last year. Despite the challenging quarter, the company provided guidance for Q2 2025, forecasting revenue between $76 million and $80 million, and adjusted EBITDA margins ranging from negative 2% to 2%. The company continues to face financial headwinds but remains optimistic about future subscriber growth and strategic investments.

Revenue
Rent the Runway's total revenue for fiscal 2026 Q1 decreased by 6.2% to $62 million, down from $66.10 million in the previous year's Q1. The Subscription and Reserve rental revenue contributed the full $62 million, while other revenue streams added $7.60 million, culminating in a total net revenue of $69.60 million.

Earnings/Net Income
Rent the Runway's earnings per share slipped to a loss of $6.58 in Q1 2026, widening from a $6.03 loss in Q1 2025. The net loss expanded to $26.10 million, an 18.6% increase from the previous year's $22 million. This reflects ongoing financial challenges and a less favorable EPS.

Post-Earnings Price Action Review
The strategy of acquiring Rent the Runway shares following a revenue miss and holding for 30 days appears promising, though it demands rigorous backtesting to confirm its viability across different market environments. Backtesting is pivotal for traders to appraise strategy performance without real financial exposure. It reveals strengths and weaknesses, enabling parameter refinement and outcome optimization. Testing across various sectors ensures versatility, while considering diverse currency pairs or stocks exposes the strategy to a wide range of market data. A 30-day holding period is prudent, allowing time for market fluctuations to stabilize. Evaluating medium-term strategies over two to three years is advisable. Assessing market performance against historical data helps gauge profitability and risk, with key indicators like the Stochastic RSI refining entry and exit points. Risk management techniques, such as position sizing and stop-loss orders, are essential to mitigate potential losses. Iterative refinement, informed by performance data and market analysis, is crucial to adapt the strategy to changing market conditions and enhance accuracy.

CEO Commentary
Jennifer Y. Hyman, Co-Founder, CEO, President & Chairman, expressed optimism regarding Rent the Runway's performance, noting a return to subscriber growth with over 147,000 active subscribers, the highest in company history. She highlighted the effectiveness of their inventory strategy, which resulted in a 24% year-over-year increase in inventory volume and improved customer engagement metrics. Hyman emphasized a focus on customer-centric innovations, such as back-in-stock notifications and personalized styling support, aimed at enhancing the customer experience. She stated, "We are confident that our new strategy is working," indicating a strong belief in the continued positive trajectory of the business.

Guidance
For Q2 '25, Rent the Runway expects revenue between $76 million and $80 million, with adjusted EBITDA margins projected between negative 2% and 2% of revenue. The company maintains a full-year guidance of double-digit growth in ending active subscribers for fiscal year 2025, with expected cash consumption between negative $30 million and negative $40 million. Hyman noted that while the environment remains uncertain, they are prepared to operate prudently and continue investing in customer propositions.

Additional News
Rent the Runway has announced several strategic developments recently. The company is executing an aggressive inventory acquisition plan, intending to double its inventory in 2025. This move aims to address customer concerns about out-of-stock items and is part of a broader "We Heard You" campaign to enhance customer satisfaction. Additionally, Rent the Runway is focusing on expanding its brand partnerships, having introduced 36 new brands and over 1,000 new styles in the first quarter of 2025. The company also launched new features like back-in-stock notifications to improve user experience. Furthermore, CEO Jennifer Hyman has expressed confidence in the company's direction, focusing on growth and customer engagement strategies.