🧠 Takeaways:
RTR will be bankrupt by New Year’s 2027 with $37m cash burning $16m/quarter. Today we’re running through the firesale.
Immediately stop the biz and flip the site into a fashion ad platform.
Sell off the data.
Sell off the logistics network.
+ June was Coco’s Best month in company history
LBAB Community: Hitting New Peaks
June was our best month in CoCo AI's history.
ARR hit an all-time high, +18% MoM.
Signed some of the UK's fastest scaling brands.
EBITDA margin: -1%.
This is our second month in a row +15% MoM growth. That’s VC style growth.
We officially beat our '25 BFCM peak, the best part is it’s only June.
Gross Margin % aren't where they need to be, so we’re spending the entire month of July solely focusing on improving out back end system. Signing up more and larger brands is great, but it also comes with higher infrastructure costs that we need to tackle.
We have a great plan just have to work it.
My original 2026 forecast was 2x YoY.
Now I'm looking at how we can 3x by EOY. It's going to be difficult, but I see the path.
Let’s Examine This Biz
Note: As always, none of what follows is legal, tax, investing, financial, or any other sort of advice. And I was never here 😉.
Rent the Runway (original Netflix model for clothing is dead. They just keep running experiments so they don’t have to admit defeat.
The CEO, CFO, and Chief Commercial Officer, all left recently, fully replaced by a team of Nordstrom.
Today we’re running through the eventual strip for assets bankruptcy court play when they default in the next 10 months.
Financial Summary
Stock Price: $3.35
Market Cap: ~$112M
L5 Performance: -98%
P/E Ratio: .5
FY 2025 Financial Statements (YoY Comparison)
Rev: $329M (+8%) 😬
Gross Profit: $107m (-7%) 😰
OPEX: $165m (+1%) 😐
Net Loss: -$22m (+$38% YoY) 👍
FCF: -$46m (-571% YoY) 🚨
Let’s Save Your Money - sponsored section
Most operators are measuring the wrong thing in customer support.
Response times down. Cost per ticket down. AI containment up. On paper, the economics look great.
The dashboard is lying.
Kim.cc surveyed 1,000+ US consumers on AI customer support. Here's what your metrics aren't showing:
>50% of bot-resolved tickets get reopened. Your real cost per resolution is ~2x what the vendor dashboard says.
36% of consumers have already fired a brand over a bad AI support experience. That's paid CAC walking out the door.
47% repeatedly type "agent" just to escape the bot. Your containment rate is measuring hostages, not resolutions. (I do this all the time. HUMAN worked better)
50% blame the company, not the technology, when AI gets it wrong. Customers don't separate your software from your business. They assume you chose to save money at their expense.
AI isn't creating a support problem. It's creating a capital allocation problem.
Customers are fine with AI for low-risk, repetitive work like order tracking, FAQs, store hours. The moment money, urgency, or judgment enters the ticket, they want a human.
If your refund disputes run through the same automation logic as "where's my package?", you're optimizing the wrong KPI.
Kim.cc built Sentinel to solve exactly this gap: AI handles ~70% of support tickets, while trained CX specialists supervise every output, manage the exceptions, and continuously retrain the system. The result is AI efficiency without sacrificing customer experience, at just $0.70–$0.90 per ticket, trusted by 200+ Shopify brands.
On July 23, Kim.cc is officially launching Sentinel. If your support dashboard looks great but your repeat purchase rate tells a different story, this is a launch worth adding to your calendar. [Save your spot]
Takeaway: The report won't tell you whether to use AI. It'll show you where AI creates leverage, and where it's quietly torching the LTV you paid to acquire.
TLDR Analysis: The plane has stalled over the Atlantic
Margin growing slower than Rev. 🤢
Net Loss is improving, but not enough. 😰
Their unit economic negative. They lose money on every item they rent. ⚰️
The tide was gone out on this biz and we’re seeing why no one else wants to run a biz that:
Buys Clothes
Rents them out
Cleans them
Re-rents them out.
Repeat.
Not a big surprise this didn’t work out.
Let’s TLDR This Biz
Founded:
2009, by Jennifer Hyman and Jenny Fleiss at Harvard Business School.
Hyman watched her sister buy a $2k dress to wear once, to a wedding.
Aha Moment:
The prototype launched as a Harvard test run. 140 dresses, borrowed from a New York showroom, rented to classmates for 1 semester.
Insight: designer fashion access, not ownership.
Growth:
Occasion rental first. A NYC flagship store opened in 2013 to drive discovery.
Subscription "Unlimited" launched in 2016, turning RTR into a primary wardrobe provider instead of a one-time rental service.
COVID hit hard. Revenue fell 39% in 2020. Physical stores closed. Unlimited was discontinued. 24% of corporate staff was cut. RTR IPO'd on Nasdaq in October 2021.
Debt piled up along the way. By 2025 the balance sheet couldn't carry it. Lenders (Aranda Principal Strategies, STORY3 Capital Partners, Nexus Capital Management) converted $243M of debt to equity in October 2025, taking 86% ownership.
Model:
3 ways to source inventory: wholesale discount purchase (42%), brand-exclusive designs at 50% of wholesale (31%), and "Share by RTR" consignment with zero upfront cost and a revenue share per rental (27%).
Revenue comes from subscription tiers (4-16 items a month), one-time "Reserve" rentals, and a growing slice of resale, advertising, and B2B pilots.
Where We Are Now:
155,692 active subscribers, gross margin down to 25.9%.
CEO Jennifer Hyman stepped down May 15 after 17 years. CFO and CCO both turned over within weeks, all three replaced by Nordstrom alumni.
Staring down $157m in debt w/ $37m in cash burning $16m/quarter.
Let’s Unwind This Biz
Here are the 3 main assets worth selling off when this biz goes bankrupt.
1) SHUT IT DOWN
Every item RTR ships out they lose $6. Full stop shut down the biz.
If you can’t make a positive $1 on your core operation. You don’t have a biz. You have an expensive experiment.
You can’t grow your way out of that.
RTR is proving that at 9-fig scale.
With an est. 4.8m visitors/mo + 155k active subs just run ads for fashion brands. It’s a MUCH more Profitable and better cash flow biz.
There is a clear audience here.
RTR has mastered acquiring traffic
They have relationships w/ 350+ designer.
It’s just the wrong biz model behind.
Ads cost ~$0 to service after you plug in an ad network.
Stop buying more products -> Liquidate all the inventory -> Rebuild the P&L around content, affiliate, and advertising.
Takeaway: There are plenty of buyers for a large loyal audience.
2) Sell off the consumer data
Since 2009, across their ~3.5m lifetime customers, RTR has ~1-1.5B size and styling data points on event and workwear purchases.
That’s an incredibly value training set/already built algorithm that many other fashion companies could use specifically because multiple customers wore the same item.
RTR has mountains of data on how customers and items:
Wore & Returned items
Cost to store, ship and clean items.
How many wears each item could actually sustain.
For a much larger fashion provider like Nordstrom (failed to launch a competitor 10 years ago) this data is invaluable. Whether they want a rental unit or just mine the data to improve sales across transactional purchases.
Since they waited too long this will be a firesale, but we should still get $5-10m for the dataset.
Takeaway: The data is more valuable than most of these bizs at this point.
3) Sell the Logistics + Tooling Network
The main asset that actually exists that the lender will know what to do with is RTR’s logistic infrastructure. This one ain’t complicated.
The NJ and TX dry cleaning and fulfillment facilities are real physical assets with real throughput.
They have advanced tooling and skill sets for valuable clothes. There are plenty of potential buyers for this type of asset.
It won’t be a sexy Tech multiple, but $30-60m gets us most of the way back to $157m.
Takeaway: This is what workouts looks like.
Final Thought
Let’s talk through PIKs (Payment-in-Kind) loans and why these are killing the industry right now.
PIKs are a type of debt where the person who took out the loan can add their interest payments to their principal balance instead of paying it back when it’s due. To simplify this.
They were all the rage the last 5 years.
For ex. You loan me $100 at 6% annual interest with monthly repayments.
I’m supposed to pay you back $5 every month ($100*(6%/12).
Instead of paying you back I add the $5 to my principal.
So after 3 months I owe you $115 because I haven’t paid the principal or interest back.
If you really believe in the long term outcome of a cash strapped biz these loans work.
But more likely they lead to total wipeouts. What is hidden in that simple math is the interest compounding.
In that scenario my monthly interest quietly goes up.
By the end of month 3 my monthly interest payments are now $5.75, because it’s 6% annual interest on $115. Not $100.
After you let this compound for 1-2 years (and add some 0s) this explodes to a number that a failing
Rent the Runway currently has $157.1m in debt as a PIK interest option through May 2027, with a current cash position of $37m.
This is dire, but they’ve kicked the can down the road enough that this won’t collapse until next year.
I’d steer clear of this in every capacity. Spring next year you’re going to see the creditors pick this thing for parts to get their $157m back.
I’m honestly still shocked RTR has a market cap >> $100m.
