A recession could also be coming, however shoppers nonetheless need to look trendy. Subscription clothes service Lease the Runway reported a greater than 30% improve in gross sales for the third quarter after the closing bell Wednesday.
Shares of Lease the Runway soared 60% on the information. However the firm remains to be not precisely an image of economic well being, posting a internet lack of $36.1 million final quarter.
One high Wall Road analyst was impressed with Lease the Runway’s earnings.
Goldman Sachs analyst Eric Sheridan referred to as the corporate “the chief within the subscription-based effort to drive the adoption of the sharing economic system theme within the attire sector.” Sheridan reiterated his “purchase” score on the inventory in addition to his worth goal of $6, which is almost triple the present inventory worth of about $2.18.
However Lease the Runway’s inventory has plunged almost 75% this yr, even after accounting for the current positive factors. The corporate introduced a restructuring in September, shedding 24% of its employees within the course of.
“As we identified final quarter, the macroeconomic setting stays powerful and has had an affect on our enterprise,” stated Lease the Runway chief monetary officer Scarlett O’Sullivan on a convention name with analysts Wednesday.
Nonetheless, the corporate is eager for a fast turnaround, and Lease the Runway is planning to supply much more clothes obtainable for lease to its greater than 175,000 subscribers.
“We’re selecting to be opportunistic and make the most of the present retail slowdown to purchase enticing stock from our model companions at discounted costs,” O’Sullivan stated on the convention name.
However Lease the Runway rival Sew Repair
(SFIX) can also be hurting. The corporate reported a bigger-than-expected loss on Tuesday and gross sales that missed forecasts. It additionally introduced layoffs in June. The inventory is down 80% this yr, however shares rose 5% Thursday because of the strong Lease the Runway outcomes.