“Rent” the runway? Not this week. All investors want to do is buy.
Rent the Runway’s stock (RENT) hit a 2024 high on Friday, showing a month-on-month increase of over 260 percent.
The surge comes as investors scour for chances to put their cash behind the artificial intelligence hype train. Rent the Runway’s CEO, Jennifer Hyman, said on an investors’ call Thursday that the brand has used the technology to bolster consumer experience.
“In 2023, we made major strides on site performance and speed across all of our surfaces, and we made it easier for users to find inventory they love via enhanced discovery features like Rent the Look, AI search, new filtering and upgraded photography and styling,” she explained.
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A number of the mentioned features seem to allow the company to double-click on personalization, which brands and retailers have agreed could be a transformational use case for AI technology. According to new data from Twilio, just over three-quarters of business leaders said personalized customer engagement will continue to be a “high or critical priority” for 2024.
And RTR has used loyalty as a benchmark, Hyman said.
“Throughout 2023, we made tangible improvements to our customer experience that are showing up in our metrics. Subscription Net Promoter Score is at the highest consistent levels it’s been in several years and improved 20 points from a low in Q2 2023 to highs in Q4 [2023] that are continuing. Customer loyalty rate is also up 10 percent year over year,” she told investors on the call.
Hyman said the company will continue to focus on its “digital product innovation” throughout 2024, which it will use to continue driving conversion and loyalty among its consumers and subscribers.
The AI piece of RTR’s announcement was complemented by 0.6 percent year-on-year revenue growth.
This earnings call is not the first time that the rental brand has acknowledged the company’s plans for AI and emerging technology.
Last June, the company’s Q1 2023 earnings announcement highlighted the very same feature investors became so excited about this week, noting it had “made foundational investments in AI.”
“[RTR] took a first and important step in leveraging AI models to improve the RTR search and discovery experience by developing an AI-driven search beta,” last year’s Q1 announcement read. “The feature will allow customers to leverage RTR’s existing search tools and product catalog using common phrases or fashion terms, which is intended to make the process of discovering products more intuitive and natural.”
Though RENT stock prices ticked up on June 7, the day of that announcement, investors didn’t flurry to purchase in the way they have this week.
While AI and digital transformation certainly contributed to investors’ renewed interest this year, a rosy outlook from the company also helped. According to its Q4 2023 announcement, RTR expects to see revenue growth of between 1 percent and 6 percent for fiscal year 2024, relative to fiscal year 2023. It is also predicting an adjusted EBITDA margin of 15 to 16 percent.
