Shares of Rent the Runway Inc. dropped 11% to $2.80 in after-hours trading on Wednesday after the online clothing rental company guided for lower-than-expected revenue growth this year and said its longtime chief financial officer was leaving.
The company expects to report first-quarter revenue of $72 million to $74 million, down from analysts expectations of $76.3 million, according to FactSet. It also sees full-year revenue of $320 million to $330 million, missing expectations of $346 million.
“It takes some time to catch up to having the revenue growth match the subscriber growth,” Chief Executive Jennifer Hyman told The Wall Street Journal in an interview. The company also set a target for 25% growth across its subscriber base and a nearly 50% reduction in cash consumption in 2023.
Rent the Runway’s outlook comes after they reported a better-than-expected rise in revenue in its latest quarter on active subscriber growth.
The company posted a narrower loss for the fourth quarter ended Jan. 31 of $26.2 million, or 40 cents per share, from a loss of $39.3 million, or 62 cents per share, for the same period year earlier. Analysts polled by FactSet had forecast a loss of 51 cents per share.
Revenue climbed 18% to $75.4 million, beating analysts expectations of $73.5 million.
“Demand for our rental services is strong and growing,” Ms. Hyman said.
Regarding the departure of CFO Scarlett O’Sullivan, the company said its current senior vice president of finance Sid Thacker will succeed her in the role.
“Scarlett O’Sullivan helped to identify her replacement and has trained Sid Thacker for the past nine months,” Ms. Hyman said.
Ms. O’Sullivan, who joined the group in September 2015, will transition out of her role on May 25, but will continue advising the company until Aug. 25.