Rent the Runway to cut 10% of its workforce

Rent the Runway Inc (NASDAQ: RENT) is in focus this morning after announcing a major restructuring that includes lowering its headcount.

How many employees will be laid off?

The eCommerce platform says it will lay off 10% (roughly) of its corporate employees to focus its spending on growth initiatives that support its profitability goals.

Anushka Salinas also stepped down as the chief operating officer and president of Rent the Runway on Tuesday.  CEO Jennifer Hyman will assume both roles on January 31^st.

The news arrives about a month after Rent the Runway reported a loss for its third financial quarter on revenue that came in shy of Street estimates.  

Note that the Nasdaq-listed firm is committed to breaking even on a free cash flow basis in FY 2024.

Restructuring to incur $4.0 million in charges

Rent the Runway expects to fully complete the restructuring in the second quarter of 2024.

The plan, it added, will incur up to $4.0 million in charges in the fourth quarter. The tech firm, however, is convinced that this restructuring will deliver up to $13 million in annualised cash savings in the long run.

Rent the Runway has struggled with a decline in subscribers in recent quarters. Its chief executive recently confirmed that the company was no longer on course to end its fiscal 2023 with a 25% subs growth.   

Wall Street currently has a consensus “overweight” rating on $RENT that’s priced at just 56 cents a share at writing.