Recently, Rent the Runway, the New York-based Internet clothing rental platform, confirmed to US media Business Insider that about 35% of the company’s staff have been furloughed without pay and nearly 10% have been laid off due to the Novel coronavirus epidemic.
Not long ago, Rent the Runway laid off all of its store retail employees. The company’s retail stores in Chicago, New York, Los Angeles and Washington were forced to close because of the pandemic. In announcing the dismissals to the employees, Rent the Runway said, “It is not known when these stores will be able to reopen, or even if they will ever have a chance to reopen.”
During a company-wide video conference, Rent the Runway co-founder and CEO Jenn Hyman said the company would stop hiring, cut its marketing budget and take a pay cut for leadership for the rest of 2020, according to them. Some managers are also required to negotiate terms with suppliers, such as longer payment terms.
Three of the fired former employees said they received a video message from Jenn Hyman a few days later on March 27, then were plugged into a video conference and told by heads of departments to either be fired, take a pay of leave or not. And their email accounts were deactivated within 30 minutes of receiving the call.
For its first few years, Rent the Runway focused its business on single designer rentals. It has since added a monthly rental business, opened retail outlets and introduced new sustainable brands and other categories such as homewares. And has formed distribution and recycling partnerships with companies such as WeWork and West Elm home retailer.
Now the latest concern is that the company may not be able to shrug off the COVID-19 pandemic easily.
More than 75 percent of Rent the Runway’s revenue comes from monthly rentals, with the rest coming from single rentals and merchandise sales. The reliance on monthly rentals has made it difficult for Rent the Runway to maintain profitability because of the low margins of its popular monthly Unlimited rental business, known as RTR Unlimited.