Strategic inventory investment fuels Rent the Runway's FY25 financial recovery

The US fashion rental platform Rent the Runway has reported a significant expansion of its active subscriber base and a return to net income for the fiscal year 2025 ended January 31, 2026. The company attributed these results to a strategic decision to increase inventory investment, which served as the primary driver for improved customer loyalty and retention.

“Last year, we made a calculated bet that increasing our inventory investment was the strongest lever to unlock growth,” said Jennifer Hyman, co-founder and chief executive officer of Rent the Runway. Hyman noted that the strategy has resulted in the company operating from its “strongest financial position in years.”

Q4 and fiscal year 2025 financial performance

For the full fiscal year 2025 (FY25), the company reported revenue of 329.80 million dollars, marking a 7.7 percent increase year-over-year (YoY). Net income for the period reached 22.60 million dollars, a substantial recovery from the 69.90 million dollar loss recorded in the previous year.

The average active subscriber count rose by 8.3 percent YoY to 143,558. However, EBITDA declined to 24.90 million dollars from 46.90 million dollars in FY24, with the EBITDA margin narrowing to 7.6 percent from 15.3 percent.

Performance accelerated in the fourth quarter of fiscal year 2025, with revenue reaching 91.70 million dollars, up 20 percent compared to the same period in the prior year. Active subscribers reached 143,796 by the end of the quarter, representing 20.1 percent growth YoY. Subscription add-on revenue proved to be a significant growth lever, increasing by 67 percent YoY in the fourth quarter.

AI integration and marketplace expansion

Rent the Runway is shifting its focus toward technological integration and revenue diversification for fiscal year 2026 (FY26). In March 2026, the company launched a marketplace pilot program, offering curated wardrobe essentials including shoes and beauty products. A 2025 customer survey indicated that 86 percent of subscribers are interested in purchasing such complementary items.

The platform is also undergoing a digital transformation, moving from a traditional e-commerce grid to an AI-powered discovery model. Recent updates include a new search algorithm launched in February 2026, which improved subscription conversion rates by 10 percent, and an AI-driven ‘similar styles’ recommendation engine.

Outlook for fiscal year 2026

The company issued a positive outlook for FY26, projecting double-digit revenue growth driven by continued product and inventory enhancements. For the first quarter of fiscal year 2026, Rent the Runway expects revenue between 85 million and 87 million dollars.

While inventory investment was a priority in FY25, the company plans to moderate this spend in the coming year. Rental product acquired is expected to be between 45 million and 50 million dollars in FY26, down from 74.90 million dollars in the previous fiscal year.