Rent the Runway is diversifying beyond its core rental model, launching new revenue streams including an online marketplace, third-party services and expanded brand partnerships.
The company has introduced a marketplace offering curated products such as shoes, basics and beauty items, allowing customers to purchase pieces that complement their rented outfits.
CEO Jennifer Hyman said the move responds to strong customer demand, with nearly 90% of users interested in buying items to complete their looks.
“The marketplace is designed to fill the gap that exists in our customers’ wardrobe, between her rental assortment and the total look she desires, by providing a highly curated assortment of shoes, shapewear, basics, beauty products and more available for purchase,” she said.
Alongside the marketplace, Rent the Runway is monetising its infrastructure by offering services like dry cleaning to external partners, including hotels, and scaling its advertising business.
The company is also broadening its assortment, increasing its “everyday” and “workwear” categories by around 20% each and planning to introduce more than 30 new brands focused on versatile, multi-occasion styles.
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The strategy comes as Rent the Runway looks to build on improving financial performance. Revenue rose 7.7% to nearly $330 million last year, while the company returned to profitability with net income of $22.6 million, compared to a $69.9 million loss the year prior.
However, gross margin declined to 32.6%, highlighting ongoing pressure on profitability as the business scales.
Artificial intelligence is playing a growing role across the platform. A new search algorithm launched earlier this year has improved subscription conversion rates by around 10%, while further AI tools are being developed to enhance discovery through outfit-based browsing and more advanced product visualisation.
On the operations side, AI is also being used to assess garment condition, helping extend inventory life cycles and improve utilisation.
The expansion comes as competition intensifies, particularly from Urban Outfitters’ rental brand Nuuly, which has been gaining traction and profitability.
Rent the Runway expects double-digit revenue growth this year but warned that macroeconomic factors, including tariffs, fuel costs and broader economic uncertainty, could impact performance.
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