Will Nuuly’s rental and resale model drive profitable growth for Urban Outfitters?
Urban Outfitters is watching revenues at its Nuuly business take off, bringing the rental and resale business ever closer to operating in the black.
The retail chain operator first launched its Nuuly Rent women’s apparel business in 2019 before last year’s debut of Nuuly Thrift, a peer-to-peer resale marketplace for men’s, women’s and children’s clothing and accessories.
Nuuly rang up sales topping $51 million for the first six months of this year, compared to under $18 million for the same period last year before the rollout of its Thrift business and during a period when Rent memberships were affected by COVID-19 conditions and inventory availability.
Urban Outfitters has seen its active subscriber numbers take a big jump this year. It finished the second quarter with 90,000 active subscribers, up 15 percent from the first quarter and more than 200 percent over the same period last year.
Nuuly was able to nicely leverage the increase in revenue from these additional subs and make excellent progress toward profitability,” Richard Hayne, CEO of Urban Outfitters, said last week on the retailer’s earnings call. “We look forward to welcoming our 100,000th subscriber later this year and hopefully celebrating Nuuly’s first profitable quarter sometime in FY ’24 (next year).
David Hayne, Urban Outfitters chief technology officer and president of Nuuly, said that the retailer saw “solid acceleration” in its subscriber numbers in August prior to the company’s earnings announcement. He said that new subscribers is a big story but that Nuuly has also seen “improved subscriber reactivation rates and improved retention rates.”
He added that Nuuly is “very focused on the bottom line as well with profitability… It’s been really great to see over 200 basis points of improvement in our loss rate in Q2 year-over-year loss rate improvement, which has been driven both by leverage on the fixed expenses as well as variable expense improvements coming from operating efficiencies that were getting as we refine our execution of the model.”
[Editor’s note: This article has been update – 9/1/22]
- Urban Outfitters, Inc. (URBN) CEO Richard Hayne on Q2 2023 Results – Earnings Call Transcript – Seeking Alpha
- URBN Reports Q2 Sales and Earnings – Globe Newswire
- Urban Outfitters, inc (URBN) Q2 2022 Earnings Call Transcript – The Motley Fool
DISCUSSION QUESTIONS: How do you see the combination of Nuuly Rent and Thrift fitting into Urban Outfitter’s portfolio of retail businesses? How will Urban Outfitters’ approach to clothing and accessories rentals and resale match up against others in the marketplace?