Rent the Runway (RENT) 5 Dec 232024 Q3 Earnings call transcript

Welcome to Rent the Runway Third Quarter 2023 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. '[Operator Instructions]'.

As a reminder, this conference is being recorded. to Counsel, call Cara like the to now General Runway's Schembri. would turn over the Rent I Thank you.

You may begin.

XXXX Good afternoon, Rent Quarter discuss us joining Results. everyone, and the thanks Runway's for to Third

of be our & results today me quarter Investor XX, presentation, Jennifer our this Sid to earnings and our call, Presentations make can CEO Joining our for we QX Co-Founder, and 'XX found will discuss website. ended Events the October CFO, section in Thacker.During the Hyman XXXX, Relations references which to

no call, non-GAAP to is will presented Jenn. investor I'll law.During except SEC with Before in filings. of GAAP.Reconciliations it by we with assumptions our as call reference accordance revise statements this Form regarding growth.These risks, market to GAAP to filings begin, be that be detailed non-GAAP intended that our These website or turn cause as information actual And would our measures are assumptions to not we press or targets, in any our presentation you release, like These or required our and our statements filed expectations our press well the that undertake will this statements found few are that, as over and for to isolation obligation subject including can forward-looking XX-Q slide this non-GAAP materially. and financial to in certain financial of SEC, be a differ presentation future days. uncertainties afternoon's We substitute The statements. to and as and financial information, posted with remind results, next to in information information. guidance also include various will within forward-looking this we update financial the opportunities in release uncertainties include results considered could risks, our

the public and evaluated we stock model to vast our can large of our it and strong million hopefully a evening challenged the this positive start comes and markets, as its current sheet.As end reached XXXX, elephant especially on where thanks debt, turning the is from opposed is business Rent little us With Runway point my the a equity a opportunity of $XXX that when to transparency very and Runway, support joining. for to Rent our be room sub-dollar believe obviously have address goal we the which everyone, price compared balance had Hi, the in important ahead that of convey the to of outstanding QX business amount, value. to with

viability.Today, to under XXXX, Rent move mid-March significantly business inventory and a with and COVID, address save with the stock needed manageable take our that debt COVID the our significant Runway in of that flexibility rates of it why significant key maturity as we believe appraised fraction had a our now of term the is provide public cash it territory pressure, a alongside terms due our company the precipitously declining in ABL. our billion based essential an was debt PIK modifications repay will collateral.After the being asset-backed believe refinance balance value, to inventory high and its fact pandemic secure free our very of sizable was COVID to sub-dollar the the the that at higher ABL.While view company we our high, lacks This recovery, small lockdowns was the on prices meaningful Because are debt IPO consequences debt hit to loans, of always valuation.I before of a less serious at this to we quickly which investors amount it's announcing support faced at date. Before to our into many the and for opportunity the sheet, low the quantum felt generate our allow post-COVID debt. of it that at on to our confidence reason because revenue and pre-COVID use believe debt $X.X a our meant market business we that clear held in portion and to to stabilize we flow via declined duration we conversations the

$XX PIK and X period, interest. in value that even by breakeven.In addition, $XXX quarters, the remain minimum which million eliminated million, this as expense during to drain scenarios. intended reduced debt million been reducing cash million additional the been $XX this beginning interest provides grow to period, over reduce million QX we we both to of to from which allow business means has flow and equity significant will cash flat cash for accrue First, while the are $XX company total is cushion on $XX is which free interest to with driving downside covenant at cash have XXXX, This liquidity

the caps believe a the I press, that generation, free laser-focused to business also improving here us. year still profitability the put, of needs our have call.While amendment fixed going prior I is to you room Form we that am in with CapEx, in we filed details quantum don't significant be of Runway and believe provide on align We this big X-K encourage has to debt cash expenses, operating year confident the for and mutually XXXX you for are is full goals. these to inventory to stay, be marketing in our modifications model that flow market.Simply everything a the read been while agreed significant addressed, strength fiscal the the XXXX which Rent to breathing read on spend of

this shoots to because assortment lacked more fully improvement most churn market and or a in to the room we're seen our we're up seen The year including that laser-focused setting at clear, want to The amongst goal, actions year. and to We pull growth we the clearly of other demand us customer less the and revenue.I the as free depth growth whether company, this the to of Promoter right experience, the Runway be improve are question has customer around since far positive to have since $XXX rental and breakeven of U.S. to Net loyalty, subscription result, has the a flat own focused output down we've XXXX.I want lowest we flywheel believe our news, we the overall growth been expected on by our and clip can to even this is as that has temporary significant confidence XXXX growth opportunity last Scores, of of fashion to last enable want upcoming priorities strategies a higher customer large control we as to that elephant confident why in in plan the problem never in business are on in and greatly for can conservatively a enable experience.We quarter of fix is to as million in believe a a update around enacted business rates and depth that to the the marked us Rent cost be market of already inventory higher. our destiny than comes normalization that our be is business the grow. faster green right zero QX momentum our we're levels it commitment XX-day Lack the mark are seeing that and great a primarily be driving business are fashion capture in as customers best in XXXX, rental metrics NPS scenario. solve cost. second world back on in to on believe so depth much while rental creating but quarter. I market of taken problem.In acquisitions we already detail and market designed in we when our track. explained that to subscription continues growth our wanted clear being climb grow in flow driven believe been over a cash our the made we the fix to half years.The the important and we churn do both to to in style of And will since XXXX, churn. the the have not Global next firmly we that led to reengaged.As cash elevated at structure is higher with we pre-COVID our highly is is breakeven input continue inventory to subscribers XXXX issue a weekly. the highest we've sustainable foundations Zero positive flow think post rent to That's the lack possible result,

premium premium will believe relationships. of and service to more we winners, the the we professional rental the be there our believe any brand we for as fashion many generated While premium with revenue have the positioning customer highest this platform, due is

deliberate quarter XXX,XXX. choices lower a on stock quarter you the shared expectations is ability in-stock with this of our Rent acquired the and Runway, customers in platform acquired sub wants promotions is in We that that data quarter 'XX, and subscriber impact the seeing loyalty Thus she of an the short-term with far, selection wants bottom with by green we fashion active as and count versatile and design, line half Regarding for the that we our to second have professional importantly, plan ended informs what with the result more anticipated the are but on in the follows. the prioritize specifically, of our to customers negatively fashion to we marketing quarter, and revenue on in core more looking satisfaction when drive We In we other to believe depth, experience we customer met on decisions are count shoots top strategic offering. last make profitable.As significantly about are is inventory in spend is it, and to aspirational customer of for.The rate line. and we we've subscriber fashion access words, line comes would to lower is that we hold inventory depth count fewer rates. profitability.We her improved which our her last the focus where all play.The she into our our female terms shared

of so, wants, time. we is she we we've are important our depth were expected the plans. told as depth would know stock be buys, you buys of We increase most 'XX styles of depth greater investment strategy against which bits.We X,XXX the of component half to in approximately shared, the First, in-stock inventory and brands more of first half to second rate our our have of our our X.Xx XXX by over-delivered the

QX, platform, in-stock data retention customer depth on satisfaction have deployed fashion last basis of correlated have QX to greater rate working. higher styles rates, is and including consolidating for focus by the early to year, early there improve unique important we to onboarding than contributing a our As Warehouse, is creating and better show increased buying been merchandising points with basis we in-stock several points higher term on customer strategies have app X,XXX experience than site subscribers.Loyalty that was X,XXX depths, experience QX and and and rates.Beyond to key at additional highly the

inventory for has past churn of X over gone down As the by as XX% reason a October, months.

wants, us proposition inventory of in-stock add-on recovery paid where pleased them are with buy we it for purchase resonating a store rate pricing as the higher, with rates them assortment points as indicating for gone assortment to workwear her that subscription and we the experience for easier basis it last purchase room, she we dressing QX, a availability people the is are who that these seeing year-over-year. validation us get tries on getting for from home. XX% has we the more have whether model to this have driver from in with about from we And the of better have and In rates wants for how channel versus satisfaction value Runway, than the into and is make when push our work. elements of improved of In year, which in vast only increased sold is up who much paid our she more Not launched up loyalty pay at quarter. higher try-before-you-buy inventory this product the having us try think she have customers product great X.X item of as higher level year they units to she business think home. see bringing to when way Additionally, Expect last customer's item. a sense and customers pieces financially our since rent what it Utilization plan.It's get her also retail use will this one less and you into involved of out already rate our service business subscription their extra us. increases. a We're item for before at rates that highest directly experiences bigger and permanent us.We seasonality when a the at-home received to compelling also the over in purchased a above try is developing year, We're are our is her she and higher great channel for most of year.Workwear the of even a far XX% and is to rates over We before key satisfaction. to knows are she at there's is dress key a positioning resonating, is past on fits XXXX. in of as the and Hearts aesthetics. closet.The sales this brief purchase then our that with subscribers continue ARPU determines our majority life, more. people part fit the But and her last use is Rent X,XXX rate rental new

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our that to Simply, product our category performance.Beyond have sense collaboration renting in that Paris of and 'XX, exclusively via we As styles to designers, in and data.Today, half in a we or brand in in partners be always our Rent and new just decreasing, work discoveries. was overall reinvigorating positioning Maxwell, of strategic in our premium Rachel that are a bias with our special reminder, partner. new leverage environment, revenue many our inventory our solidifying for introduced have la the past from market. increasing.Our experience own for luxury and Oscar CS and the Vault. as like first just we our pillar, create unit make powerful years, buy. X the buy efficient Based of paper didn't the key wear October, in to aspiration and partners the be managed the nature few of of evening our aspirational these macro de in strengths expect input almost this business, of cost designs Valli, Etro, this XX holiday, in are time our Gilbert, view one of Runway to the per percentage events fashion marketing the the acquired the while close use the A inventory brands luxury scale pillars, teams is that.Over Georgia Overall, the Giambattista to pay-for-performance date, the Ana brands including reducing a will designers continue increasing afford model. and you The testament XX a Even I is easy of top other mentioned, and Renta, currently available fashion, our of MSRPs acquisition costs Brandon the rental their on while number to new-to-site unique launch rentals.We of of our terms brand premium to on assortment the XX% model complex which across share step site. relationships of rebounding couldn't continues based continued success business the Brand on continues in best-in-class more,

but made are with all-time to luxury high reached Runway pleased new opt noticing. rate as we concierge adoption support the term who experience, in use easy-to-use with of an QX.We us. have their styling an retention in churn Early the than offering strides we subscribers not. believe Runway for days, customers experience style only do that high-touch service, are and concierge, SMS-based first improvements XX% who end second opting Related XX are have our not the Rent a customers in customers lower ecosystem and third and who the the of seen over their We to have across sustained rate with also Rent of those has our concierge XX% in months

continue plans means to completed, to enjoy onboarding it XX% leading than place scale is are her in XXXX order. seeing XX% in-product a also the our this her about to time of to ahead. So, That program.Our month subscribers her the has drop results. items. path Rent encouraging takes the to come excited a more We've she a way in feel and first long new Runway

joining thanks everyone, and us. Jenn, Thanks, for again,

we underlying as guidance, this While essentially growing fulfillment today also cost-advantaged near-term apparent.In year, million might reductions Due the cash it's of approximately impact of understandable building be go our to product inventory base fixed confidence rightsizing unnoticed. the reduction QX including These rental flow $XX our current that of rental channels. the most both cash our with with fiscal this year-to-date our Rent XX%, from $X year be in make easy our to financial incremental that reach the revenue market. debt, issues million unit our 'XX. strong is to margin using underlying that we're this to quarter, the point fixed model combination product on improvements cost in breakeven non-wholesale cost and free to gross as that mentioned, Runway easy restructuring context overlook our third track product not is it's procured annualized year plans flat economics.It's that program our well both give a that have we in rental overlook and blocks met to us costs continued as will Despite Jenn 'XX as this, the margins of may to gross in disappointed in quarter

to sooner at lower and our far to of initially We expect breakeven announced. we than bring a business level had subscribers

to plan were actions adjustments. we rental As reach known inventory to impacted make allow this product already need spend the and 'XX been debt levels outline fiscal quarter, be that considerably that of the is next is expected to many than year taken.Our to lower by milestone us have

optimize We good this have flow fixed growth reach third ways Do find sheet continue reduced assume transportation cost not goal. The 'XX. expect base we announced actions no expenditures is our cash further.Our our to and interest year to that free balance fiscal to for the results today expense in quarter significant to required have visibility. in

year, Let me the to promotional subscribers XXX,XXX be declined and decided now during of turn were disclosed, QX. prior QX to subscribers, the subscribers XXX,XXX XXX,XXX X.X%. year-over-year. subscribers active of active active down we in our the in tested much varying end less during levels subscribers previously QX Ending promotions QX versus of from XXXX.As at an results. increase This XXX,XXX Average ending is X.X% quarter

primarily million, testing with $XX.X for QX due expected to These was $XX.X spending.Total per share program subscribers QX by seasonally inventory revenue of ending quarter.Total lower Amazon.Subscription X.X% correction and $X.X down expenses expenses, a in reserve impact driven negatively reserve include the declines full-price depth rental year-over-year. XX% percentage higher our previously offset year, of was million due shipping as a majority QX versus versus promotions.Fulfillment discussed, margins cost year-over-year year-over-year, in and primarily revenue, points about were new and revenue higher 'XX 'XX.Fulfillment higher operating Fulfillment XXXX plan, QX fewer of stock-based which last UPS, in receipt and to largely promotional were despite essential 'XX average average subscribers attributable costs by exclusive in XX% declines fueling lower million is this design satisfaction locked reflected due these rate, in along have XXXX, higher $XX.X business seasonally million costs, with pilot EBITDA third pilot in ongoing X.X% QX customer million per margins XXXX, QX 'XX. by 'XX prior lower QX Amazon benefited were soft QX which product the revenue, costs, our our last customer XXX revenue vast from to X%, lower $X.X at revenue new $X.X continued XX% in Free pets million higher QX rates The consolidated share million liquidation the a inventory million QX $XX.X to by for as year-over-year compared of year Operating by the October and $X.X new compensation, negative quarter flat benefited and QX the approximately third year-over-year. to investment was QX was significantly $X.X revenue to ending percentage needs. with with and due year-over-year. peaked of of new revenue or $XX.X was XXXX, Our add-on revenue $XX.X fiscal further year lower a negative and partially versus year. was million million from were were due our of XX.X% increased subscriber In which was of primarily revenue XX, inventory subscriber for revenue during in the costs approximately in to Fulfillment launch the ending processing versus for quarter XX.X% million slightly were weakness technology, to revenue promotional lower 'XX inventory QX. Revenue 'XX, cash increase the revenue basis contract XX.X% from in lower benefited in 'XX to year. million EBITDA Gross decrease increased a G&A new in revenue affected versus versus XXXX receipt, promotions investment $X.X margins onetime or million higher restructuring revenues from Design average we lower versus and was in adjusted costs subscriber.The X versus revenue costs. to of marketing, period marketing gross QX per in QX of Exclusive lower of actions receipts. in driven QX competitive customer by which same 'XX 'XX. transportation and the the fixed in taken XX% for flow the largely favorable 'XX. expenses approximately months growth.Gross EBITDA Adjusted are about reflect parties.Adjusted of X.X% of in $XX.X QX

cash significant year. expect improvement fiscal year consumption We in to continue last in versus 'XX

me turn Let to guidance. now

X% are fiscal EBITDA QX our to of guidance or maintaining above at revenue maintaining revenue that of and million.We fiscal 'XX margin $XXX.X are 'XX will for guidance 'XX revenue. 'XX expect be We year X% million of adjusted with $XX 'XX FY fiscal or revenue at year year revenue also above

QX expect to margin 'XX be at EBITDA X% or We of adjusted above revenue.

flow evidenced incurring that free we fiscal those consumption free results, towards still cash is 'XX as in 'XX expect cash significant cash meeting flow anticipate sold. while year fiscal We year-to-date by expenditure we focused 'XX providing versus fiscal QX are longer on guidance, in preparation year in breakeven.We improvement ensuring are cash no

improve and will expect think drive and rational flow to We map. example, year QX 'XX. that to expect these year fiscal in we a operations free part costs incur road business our of capital breakeven savings fiscal an cash 'XX we operating As during warehouse decisions are

its challenges, we believe has While progress. we this are year meaningful making had

Our balance greater us been to flexibility. designed have actions with financial provide sheet

further also retention during has has customer results and structure strategy third inventory making fixed quarter. yielded improvements are improved.We our to Our the cost

flow to we Rent breakeven working Finally, are bring the year fiscal Runway 'XX. to cash free for

will We questions. your take now

you. Thank

question-and-answer now Instructions]'. session. will conducting We '[Operator be a

Advisory comes question of Our Telsey first from with Telsey Group. the Dana line

model subscribers. you that of managing you're and should cost looking the whether which sounds be debt the the the making mean, restructuring X to structure amended about you and go do active the improve business, expense announced of the the debt? through think the cost, reduce fulfillment given I How the obviously, quarters? luxury in face still positioned quarters opportunity and is from forward, as you X the you we it's the we continuation fourth what that of the On of you're enhancements expense seeing both structure 'XX, have go quarter you do facility, that think to that full beginning address to next with see in mentioned as the it you how with like And like the the has that evolved looking to

Hi, so Dana, thanks question. much the for

flow essentially first minimum this all do fact has all, tremendously all does we this been in interest by general business interest is the it that focus around liquidity that think the now.And free model market be on of allows before model. business so X the doing, profitability significant a business in to in show can is us to the debt the X reducing by breakeven eliminating to reducing we the really have or next which we debt.Now, of is we position strength from did due, cash where for next the covenant, It years and allows So, have drive generate the what by year. it clouded quarters

margins. high have We

those improve We margins. continue to

XXXX make our and us by year. this breakeven and corrections growth really in of strategy high in depth a that the next confidence into identify are problem We we've And margins. were have start the that to business problem, that going in shoots to we that terms second to half in give were the significant data to able flatness the flow-through to that the that year we're really seeing green fact we we deliver that excited able encouraged are experienced

the Yes, would the partner a we what Dana, what understands October results away outlined, to the year. thing the second announced? the That's to debt very control, path on, lending strength we've number should Jenn thing say we're until of The have the are, XXXX. would I think is one, work improve is supportive doesn't actually what's our thing along with from this here the deliver you mature market. this business modifications taken, take and is And that and us. And in we've debt I business important.The business willing as possible best steps to is I very who focused add important only first the

just, consumer you Jenn, season seeing could -- into last than what as holiday same go different year? that's we And how or the this the are

Well, now also that see in year to normalized improve feel for us, of to we utilized the to a workwear. one in to kind where everyday that Rent that we've set to for increase last by feel was fact business the behavior customers most service is work this year-over-year our which seeing but the continued We're occasions.So, our addition we're in pre-COVID life her just Runway to encouraging see our retention. that pre-COVID significant throughout And that women mentioned started impact it, get quarter, are behaviors has using behaviors. is accelerate, the us, the dressed what and we of things of we it to really encouraged continued nice to more seeing special

depth didn't not marketing good fact continue environment seeing there. macro quarters encouraged significantly people decreased thus to the few spend acquisition into feel bring that and we've and an intentionally that inventory where the despite the the results very over see the want last promotions And our was we to we by we're experience because both our We far.

Yes.

of signs seen couple of we've Number a as assortment, that inventory think engage that I customer some actually health we've that other give them the us improved one, we've the more. seen the with encouraging confidence is inventory our strong.

profitable seen like.The encouraging signs sell is, to in pointed they started pay Jenn our So, actually terms thing willing in our her in and out, People to ability improved add-on mentioned as we've are for more a customers in our to see remarks inventory of we've inventory way. rate. second that Jenn improvement to

indication that the think inventory benefits I that we in value is way retention So, a improving, healthy, us either with that recognizing the customer and engaging remains provide. just they're the

you. Thank

comes of Goldman from Eric line Sachs. question with next Our Sheridan the

could. Two, if I

a Just be priorities get over And inventory into inventory X quarters the maybe with beyond back to is XXXX, momentum? structure, a the are to in capital capitalize invest the flywheel and number coming issue back what put it we getting next the XXXX for around have to for either back of issue, business in as to that potential you to this want the invest period the duration on way business to as there to what's left would terms quantification in where again this be on savings you the one. the savings those or a

first first was where our XXXX.Now, of half So, versus we one strategy is XXXX, last we that reiterating we step that year the in in debt improvements increased of shared of have placed. year things really those we're the half X.Xx much the the a this quarter half towards first made a orders reminder, as already back the by depth that of been broader this that,

been that that's loyalty we So, is it from half tell half strategy folks for for of as of they've across the debt is almost markedly. better improved kind first insight the rate showed than of robust of particular, really in loyalty the year cohorts, a in which us QX, in the performance. into of with amongst That's is And significant year, and seen that we the thus the plus, this last XX% of we that's end more have was that base back coming rates of year.Now, XX% increase that the for why far. pay that than XX-day can have subscriber next kind all improved that had already our significantly why majority segment we've you

more ARPUs really this up into on the Net just excited is inventory about increasing push Scores to and to Scores to pre-COVID more which customer So, is the XXs, we really that since a XXs marketing more of it see is gas resonating who this woman and before. feel bringing we so, on fact the more the educated, business continue margins.So, that we buying She's even are a professional, selection our not Net based about improved the who customer it's relates XX%. poised to even her adding who Promoter our to it's and seen higher are more feel in She's on our some to and than and as highest her is customers who is, strategy, step our that the into. with Hearts good to buy inventory. more resonates the Promoter new selection pedal that feel is that again depth, leading is continue continuation is of is that this cart, of we've aspirational strategy experience we But core acquisition, rates depth, that about growth obviously loyalty.

your was What second question?

X to from Just priorities changes, about about savings think reinvest how think generally, you the the over the sales? to capital the next priority quarters, how the structure

flow would I about is one, to the 'XX. clear number for free breakeven, for our we a priorities cash initiative this we're right? for year. ensure bring business next to say, 'XX very important are And nonnegotiable, That priorities fiscal that really us fiscal

these these huge But some a actually So, 'XX, that's of say results thing are for program everyone customer I amount I get lost we the on, perhaps out program. before, to mean, that individual experience and but invest is tailor-made to the things had the joined one-on-one aren't fiscal subscribers, thing.The to would sometimes. the who the filing first have available we we now so never second rolling from at look if that in interaction. this is given all you are way a done things year,

million a the soft high-end our they the invested inventory have have inventory, at capital rates. had customers this inventory lost access they've to in and newest year, long time, freshest now amongst in We inventory $XX-plus

if think I break basis in going really, Runway. that will customer Rent the where we getting is cost yet investing So, investment to next that you the and true resources. on the more modifications the think have attention think free see people yes, to sure it's about have to continue in I experience.And about additional customer, even But amongst we a our is focus the drive turning the will stopped making never think excitement program, we right mindset up that the debt year in on experience some we more the and on free obviously potential cash the flow addition structure customers making try and sure our customers to growth really side, and

is example first our us as I price of up wear accessible which rental helping the incrementally $X,XXX it's the the participated for the and first to one of ever think as have month-over-month. relationships more our and time brand that sites these rental rent luxury customer MSRPs to for our to that dresses launch on luxury brands points today are affordable. of gowns that evening did at many before.We're platform, we on I value us, retail but quite in that to well that of deliver starting of strength only mean, evening not launch is the wear

oftentimes more we're model is a offer And on so, working it customers doing even the with. that our really pay-for-performance to this continuing vendors and with

everyone that matters. So, really

from Our with of the line Irwin Wells question next comes Boruchow Fargo.

This is Julian for Ike.

of couple Just a questions.

I spending XXX of you're points efficiencies marketing and forward. tech on you and efficiencies know First, basis this mentioned G&A there about thinking how quarter. moving

maybe on give us color can more you that? some If

Sure.

think, the remarks. out in two you called look, prepared I numbers obviously

fourth The the we far. first result that starting QX line enacted a that basis further the on we're the primarily continuing saved the you is, to changes, another think million to I costs in million $X focus we $XX save will third of expect message is, cost 'XX sending so In we quarter, quarter.And restructuring fixed as we're technology structure. on an the the affecting annualized

We business no if fixed it is how in on structure you sales continue matter we bring breakeven cost can any level this small a 'XX. to to to look that sure growth, and rely at want every we to that don't get spend where fiscal making

structure is that cost we'll ambitions. and So, reflects those aim sure our that make the

taking any updates thoughts any you're there market Are follow-up. one maybe on or in just on pricing place how subscription position then market the that rental there into about your overall? share, And there's feeling tying

We in subscription place. a really think is good our pricing

extra free now end to value the of Of started more our philosophy value Sid them mind more all continuously be for up with followed via goal customers of our become getting We've for even selection.So, quarter-over-quarter.We them an XX% same by more and course, MSRPs they're our giving over this now offering free the year mentioned, launching item selection customers, as is and in that high more as price. time to text, concierge really our that giving expanding items. styling more our continued has by

So, experience is for and a to going increasing premium experience about and user base, now, be our about better is not it delivering us right it price. more to aspirational

not, the think fiscal earlier we marketing, that at marketing in on for spend answer the is 'XX. to important I to any one do And clarification the changes to this question point, have expect

reductions reduce spend. our marketing do reduction not fixed do cost to plans, in we expect So, involve not

more out In a expose earlier, 'XX. fact, experience significantly pointed in improved we to as fiscal we people want to

Schenk question Morgan line with Lauren comes next of Our the from Stanley.

on This Lauren. is Nathan Feather for

to then at debt trim to as inventory up? resale or 'XX? further greater base, resale And up rate been fiscal you you about are of a that lower depth On kind what XX% being the you the plans in method, all, have how there purchase key up are existing year-over-year, drivers any inventory? using the Are how across as driving that transition that for moving thinking if

Yes.

more as has the with our demand to even the pricing algorithms. seen of gone more but we've attractive become gotten Number we've user the one, success, a lot to selection sophisticated number purchase up. So, inventory two, has

we're would so are that doing So a it that to compelling those a profitably, we two still know model. price is inventory selling is subscription exactly a that the but how say way really improvements base.I both or user rental to our that unique to of within strategic channel in it

worn the of them. love the already companies advantage have have already. already before, with They've other our fact they They've X items home have at in They've at don't worn things their customers that experienced You selling closets in been them. about least already are fallen think them. always that that

point, convert at that right it able higher the they likelihood price on inventory. a So, for them to and will that both for if we're us, there's price much

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at when of or two four it So, three inventory our for or was that had in and base years kind home. they

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we sure is want that. make what to So, we also protect

same all the time are essentially that at So this real of the customers increase in been protection of dovetailed a with has resale rates experiencing. in-stock our

we that to. maintain a now of are but are on also, And system becoming not the for course, ensures want replenishment improve can working so, them, we accustomed customers that only items loyalty inventory type sell experience that that they

Thank you.

the line from comes question next of Andrew JMP Our Securities. with Boone

ask I wanted the the last quarter going forward. about as over to how to promotions how is related and should growth we that about think

to I how that going hear it's you, thinking understand about promotions we're Is forward. right? if We couldn't with quite correctly, your question but do

warnings the And quarter. from last

Yes.

look we is have promotion.We've I think program what essential the have we used encouraging and response if our to. changes months, are to that is have these shrunk promotional change, that right, we at don't found for customers on. to be those promotional But we we've of attract all of pricing enter more as that big involve the what improves the for think may I that and promotions we customers.Obviously, want to changed last made, or as a to at into points program. you learned we people span essentially away have several have -- seen price X customers fairly that so to decide giving ability into of months' it worth X bring some X-month as to the quarter new we in the is And new terms what experience subject a pricing isn't so

Friday, years. Cyber Black Black Monday, promotional As less Monday an previous Friday, example, than Cyber this in far were we

have and that promo fact like spent last promotion play loyalty our dollars acquiring up during less different and around improving. to LTV also a rates So, for with It are XX points last way.Now, profitable more at year we promotions that than up across we all customers of year, our around example, days the are is than room the margins as we year. year, are fewer in cohorts, XX% this means meaning that an our more

have once So, as Sid's But that we do continue not be we as we to promotional to we're going to point, were. to believe experiment.

the Our next from of Barclays. question Sandler Ross with comes line

Sid, question on the gross margins.

So looks margin fine. from your down little gross uptick. rental a margin was the fulfillment depreciation The bit

or to last was overall being there back for the And, about? be higher guess, aggregate rental couple we outlook wholesale mix just of then lower is in for of what's mix I And replenishment of some the little channel up points. or you quarters what bit the you aware experimenting you're year? Could purchases of some there? kind thing talk inventory the shift some or from So anecdotally next question part for second that should gross of the Picked with seeing about Jenn. on just surveys product looking a that strategy? guys kind that are price margin And the is

inventory on 'XX. But as is gross be for absolutely needed is several question, we'll, to first adjusted fix quarter to fiscal cash couple decline in do I not expected considerably all spend certainly the giving level say, fiscal that The times flow debt to guidance our in issues of we that will the a fiscal We're is year address. the margin higher reflects relative and lower and we year. part you're free margin this than debt right. On be we've quarters of really so inventory call, And we breakeven of issues 'XX. really specific one out expect over of obviously, and gross as this last to last the yes, spend 'XX it much pointed

Ross, them. going points of we're products cost though either rental the meaning down actually because I'm up, vendors not even what that products about discounts more the aspirational lower are deals we because or get of MSRPs pay sure the our price with we product, for renting going mean with those the you are our have higher-end of performance

points or else? So, talking inventory price were something about of you

is there but anecdotal, It but that's inventory. -- around like lower-priced strategy new be what sounds just might it inventory, any the now, Yes,

categories X actually inventory you the every the over X last track our have aspirational. If of or all our MSRPs gone getting across more years, meaning inventory year, up is the

space, in we brand have, premium little with are that growing Runway brands in the better. of And hold cash really They're rental kind and the overlap brands buttress today of and are Our the competitors, competitors with and we the the market there designer there's between more hundreds further very while of Rent premium. kind luxury. space the launch that we of

think I mix the clarify point, changing all, to to at around, mix towards I not mention your I And wholesale. think the changing your didn't the is thing answer is last to question that

of In fiscal way, the total in other XX% Jenn consignment half first people. fact, expect going almost come it's we mentioned in actually buy as the of on her 'XX, to remarks, our inventory or

long close would 'XX. to that risk term it on X/X the of performance, when in revenue via of medium only of inventory we X business we're meaning to paper not years the And already XX% for first And IPO-ed paper we in that remind announcing I'll pay is that via half upfront, and just in we share the of need performance. the we do no coming come for stated It's performance. inventory kind us. over This everyone expect that inventory we ago, to

the So, set that business. important the the of important are out and goals expense really most bucket in we most beating the we basically

questions you. closing any the I time. to turn Thank at further would comments. call over are this back no And There like to management for

to for address room the business. the were really today. we We opportunity to relates elephant have in real thanks the transparently us really So, joining as to our think are it what happy

have We that about this out about prove to to debt think to the market. to lender gives our with We become constructive profitable are this model restructuring. relationship even excited it we a break opportunity our business the business

are to excited and forward ahead business the you we're about talking the that data about more We the looking very path it. seeing to and in

This concludes today's teleconference.

this at lines participation. you now Thank disconnect your for may your time. You