Fashion
Fashion Briefing: How Nuuly is riding the rental wave to 300,000 subscribers
This week, a look at Nuuly’s rise to popularity — the company has more than 300,000 subscribers and saw nearly 50% net sales growth in its most recent quarter. Also, early holiday sales data and stats from Nordstrom’s recent earnings.
URBN, the parent company of Urban Outfitters and Anthropologie, among other brands, announced a record earnings quarter this week. On Tuesday evening, the company posted a new high net income of $109 million for the third quarter. But it was at Nuuly, URBN’s rental business, which offers products from all of its brands and others outside its portfolio, that saw a real shot of growth.
Nuuly’s net sales increased by over 48% to $97.2 million during the quarter. That was driven by a 51% increase in average active subscribers, putting its total number of active users at over 300,000. It’s a significant growth spike for a company that’s only five years old and reached profitability late last year.
David Hayne, Nuuly’s president and URBN’s chief technology officer, attributed the growth to a combination of the actions Nuuly has taken and the benefits of a rental-friendly environment.
“There’s a lot of wind at the back of the model,” Hayne said. “We’re hiking downhill. Rental is on the upswing and more people are familiar and comfortable with the idea of renting their clothes.”
Nuuly has specifically been working to broaden the amount of inventory available on Nuuly. In February, Nuuly opened a 600,000-square-foot warehouse in Raymore, Missouri to manage the company’s increasing variety of items and triple its subscriber capacity. There are now over 150 brands on Nuuly.
Product breadth is an essential component to rental success, Hayne said. When URBN first began toying with the idea of a rental service, it considered confining it to a single brand like Urban Outfitters or Anthropologie. But Hayne said the company put off that idea until it could launch a service like Nuuly with all of its brands and more.
“Available assortment, depth of assortment, variety and an [avoidance] of out-of-stock situations are all hugely important to retention,” Hayne said. Nuuly’s retention data shows that nearly 45% of subscribers have remained active after 12 months and nearly 40% are still active after 36 months. “Executing on the promise, shipping things quickly and handling issues quickly also helps our retention rate stay high.”
The rental boom is affecting more than just consumers. Fashion brands can see a benefit from the model, according to Rent the Runway founder Jenn Hyman.
“We work with hundreds of brands for whom rental is a primary source of customer acquisition,” Hyman told Glossy in October. “We partner with those brands, they can meet new customers and we revenue-share off the success of the inventory.”
Rent the Runway currently has around 129,000 members, a decline from the 137,000 members it reported last year.
Black Friday preview
While Black Friday and Cyber Monday are just ahead of us, Adobe has provided some data on the holiday shopping season so far.
This November, consumers have already spent $77.4 billion online, up 9.6% from 2023. That growth is also 8% higher than Adobe’s projections, indicating that the holiday shopping season is off to a strong start.
Of that spending, $14.5 billion has gone to apparel, which has outpaced other popular categories like electronics and furniture. Consumers are also spending more on expensive goods than in previous years. Over the last four years, Adobe saw spending on the most expensive goods drop by 47%, while this year it has increased by 15%, which reads as a good sign for the beleaguered luxury industry.
“The holiday season is off to a strong start, and we see a consumer willing to splurge on more expensive items in categories from electronics to appliances, partly in response to persistent discounts,” said Vivek Pandya, lead analyst at Adobe Digital Insights, in a statement alongside the data. “Shoppers are also embracing new ways to shop online this season, from the rise in mobile shopping that will again eclipse desktop, to the use of generative AI-powered chatbots as a shopping assistant.”
Stat of the week
23
That’s how many Nordstrom Rack stores opened this year as Nordstrom continued to see valuable growth from its off-price banner. Next year, Nordstrom plans to open another 15 Rack stores to keep up the growth. Nordstrom’s revenue grew 4% this quarter, according to its earnings announced on Tuesday. The company increased its full-year outlook from a sales decline to a small positive growth of 1%.
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