Rent the Runway shares strut higher on debt restructuring; 3Q earnings miss estimates
Published: 16:18 05 Dec 2023 EST
Rent the Runway stock moved higher after the fashion rental platform provider’s announcement that it has restructured its corporate debt overshadowed disappointing third quarter earnings.
The company said that under the amended credit facility with its existing lender, it has eliminated interest for the next six fiscal quarters and reduced the minimum liquidity covenant from $50 million to $30 million.
“We believe that the terms that we’ve agreed to with our longtime lender further enable Rent the Runway to achieve significant free cash flow before the debt’s maturity date, helping us to demonstrate the strength of our business model to the market and, importantly, to grow,” Rent the Runway CEO Jennifer Hyman said in a statement.
“Meanwhile, we’ve made significant strides to improve our inventory in-stock position, which we believe represents a turning point for Rent the Runway.”
The company reiterated its fiscal 2023 revenue and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) guidance and said it remains committed to achieving free cash flow breakeven in fiscal 2024.
Meanwhile, for the three months ended October 31, 2023, Rent the Runway reported a 6.3% year-over-year decrease in revenue from $77.4 million to $72.5 million, missing Wall Street estimates of $73.16 million.
Its loss per share was also greater than the expected $0.42 at $0.45 but was an improvement from a loss per share of $0.56 in the year-ago quarter.
Rent the Runway shares gained 3.8% at US$0.69 after Tuesday’s closing bell, after finishing the trading day 8% higher at US$0.67.
Contact the author at emily.jarvie@proactiveinvestors.com
Follow her on X, formerly known as Twitter, @emilyjjarvie
