After Five Years, Rent the Runway Still Not Profitable

Illustration for article titled After Five Years, Rent the Runway Still Not Profitable

Rent the Runway, AKA Netflix for evening gowns, is looking to raise $50 million in venture funding. Because it still is not turning a profit.

Founded in 2009, Rent the Runway has opened three stores in New York and Las Vegas and recently launched a new service, Unlimited, a subscription service for accessories.

The company is currently valued at $220 million and has raised $54.4 million to date, according to Fortune.

The company's service is popular, with five million users who rented $300 million worth of dresses and accessories in the first half of this year, according to the company. Rent the Runway has opened three stores and it is, notably, the country's largest dry cleaner. But it is not profitable.

In 2013, Rent the Runway generated $28 million, which was 25% lower than internal projections, and lost $14.5 million. In 2012, the company brought in $17.8 million and lost $12.3 million. In 2011, it brought in $10.9 million and lost $5 million.

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Investors are reportedly concerned that Rent the Runway's business is seasonal since most women don't need to rent evening gowns with much regularity and demand for gowns is thin during weekdays, which: excellent point. Unlimited seems to be Rent the Runway's answer to such criticism.

I've used Rent the Runway twice without any hassle, but I know other women who have absolute disaster stories. Using the service seems like a bit of a numbers game—if you use it often enough, something is bound to go wrong. The only difference between a Rent the Runway disaster and say, actual Netflix, is that an ill-fitting evening gown 24 hours before a big formal event will probably push you make a Rent the Runway voodoo doll.

On the plus side, if this round of fundraising doesn't go their way, Rent the Runway can rest easy with the knowledge that they employ the country's most talented dry-cleaners.

Image via AP.

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DISCUSSION

I keep trying to come up with some kind of event so I have an excuse to rent a dress from there, but I just don't have the kind of life that involves gowns. The fact that me and this dress will never be together is a constant source of disappointment. (Also the fact that I would look like a stumpy little sausage in it.)