What Rent the Runway’s 360% stock surge reveals about the future of AI in fashion
Good morning, Broadsheet readers! Women are criticizing Nike's Olympic track and field uniforms, more than 40% of Florida voters say they'll vote to reverse the state's six-week abortion ban, and Rent the Runway's stock surge shows how seismic AI will be for fashion. Have a thoughtful Monday!
- Fashion forward. Rent the Runway, which languished as a penny stock less than two months ago, quadrupled its share price last week thanks, in part, to two letters: AI.
The clothing rental service led by CEO Jennifer Hyman saw its stock rise about 360%—its best week ever. Following a 1-for-20 reverse stock split that allowed the company to avoid a delisting from the Nasdaq, an earnings call mention of AI seems to have convinced investors that the beleaguered business still has some life left.
“It is the biggest thing to happen to consumer-facing businesses since the launch of the iPhone,” Hyman said. “You’re either going to be a beneficiary of AI as a consumer-facing company or you’re going to die because of AI. Fashion overall is going to benefit.”
Like many fashion brands, Rent the Runway is now relying on AI to help customers search for not just a type of clothing (“jean shorts,” for example) but an aesthetic like “Miami vibes.” My colleague Sasha Rogelberg dove into Rent the Runway's share price and AI news in a story for Fortune.
Rent the Runway is attempting to stage a turnaround; it recently hired a new CMO, Natalie McGrath, to invest in marketing again after years of pulling back and focusing on surviving as a business. The pandemic halted the momentum of clothing subscription services.
If AI can convince investors that Rent the Runway has a promising future ahead, what can it accomplish for fashion brands that are already doing well? Rent the Runway's value proposition depends on its inventory, ease of use, and curation; customers turn to the service to spice up their day-to-day wardrobes, participate in trends, solve problems like not knowing what to wear to work, and dress themselves for special events and travel. Instead of users having to envision how Rent the Runway rentals would improve their wardrobes, Rent the Runway can now provide customers with ready-made Pinterest-style examples.
For a business seeking a lifeline as it attempts a comeback, that's a dramatic change. For everyone else, it's one to watch.
Emma Hinchliffe
emma.hinchliffe@fortune.com
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This story was originally featured on Fortune.com
