[HN Gopher] Rent The Runway S-1 IPO
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       Rent The Runway S-1 IPO
        
       Author : marc__1
       Score  : 23 points
       Date   : 2021-10-04 21:28 UTC (1 hours ago)
        
 (HTM) web link (www.sec.gov)
 (TXT) w3m dump (www.sec.gov)
        
       | raman162 wrote:
       | I'm not the most familiar with rent the runway but I'm curious if
       | this type of business alleviates or worsens the fast fashion
       | environmental issue.
       | 
       | In theory it helps by reducing the need for people to own the
       | latest fashion and that could lead to a reduction in waste. But
       | I'm assuming that they also have to bulk purchase the latest
       | trends.
        
       | fasteddie wrote:
       | As a mediocre armchair accountant, I'm interested in how to read
       | their P&L since so much of the loss is depreciated clothing,
       | which they presumably continue to rent out even after they mark
       | down the value of the clothes.
       | 
       | Presumably a dress has a much higher LTV in future implied
       | subscription income then its inherent accounting liquidation
       | value.
        
       | marc__1 wrote:
       | This is a very detailed s-1. The 'Our Financial Model' starting
       | on page 84 is a great way to understand how B2C companies make
       | money:
       | 
       | > Our ROI calculation assumes an average of 20 lifetime turns per
       | unit. Based on the average lifetime turns as of June 2021 of all
       | items we acquired in fiscal years 2015, 2016 and 2017, we have
       | determined that an item can turn a minimum of 20 times on average
       | over its lifetime.
       | 
       | >When we multiply the item economics from fiscal year 2019 and
       | the first six months of fiscal year 2021 by 20 turns, this
       | implies total lifetime revenue of $445 and $536, respectively,
       | and total lifetime profit of $212 and $324, respectively.
       | 
       | >Therefore, our product ROI has improved from 4.0x to 5.9x on a
       | revenue basis, and from 1.9x to 3.6x on a profit basis based on
       | item economics in fiscal year 2019 and the first six months of
       | fiscal year 2021 applied over the expected lifetime of units,
       | respectively. We believe we have the ability to drive
       | improvements in product ROI over time as we continue to decrease
       | our fulfillment expenses to improve profitability per item and
       | use more efficient product acquisition channels to reduce upfront
       | product cost.
        
         | raman162 wrote:
         | I believe that this answers my original question I made in a
         | previous comment regarding the impact on environmental fast
         | fashion. Sounds like it's better for the environment for
         | someone to use rent the runway versus making a purchase at H&M.
        
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       (page generated 2021-10-04 23:00 UTC)