Jennifer Hyman has been busy at Rent the Runway Inc., cutting costs, refinancing debt and, finally, sweetening the service. 

Now the payoff might just be starting to return with some signs of traction in the corporate’s fourth-quarter update.

“The main headline for 2022 is just, we made Rent the Runway a financially stronger business,” Hyman, chief executive officer and cofounder, told WWD. “We’re at a degree now where our gross margins are healthy, our cost structure is right-sized, inventory acquisition is efficient, and 2023 is the yr where we’re going to make significant progress towards profitability.” 

Fashion rental service ended its fiscal yr on Jan. 31 with 126,712 energetic subscribers, a ten percent annual increase. 

But Hyman and the corporate need to grow much faster — and already added one other 11.4 percent to its base as of Saturday, hitting a record high of 141,205 energetic subscribers. 

Now the firm is projecting a complete increase of 25 percent this yr, putting it on the right track to finish 2023 with over 158,000 energetic subscribers.

Hyman noted that the upper subscriber base foreseen by yr’s end would generate one other $20 million in money to fund growth and that, at 185,000 subscribers, the corporate could be cash-flow break-even on a maintenance basis. 

“That will not be distant,” she said.

To get there, Hyman is seeking to proceed to make Rent the Runway higher for its users.  

Last month the rental pioneer began giving the vast majority of its subscribers 10 looks a month as a substitute of eight at the identical price. It also recently introduced a Shop the Look feature that helps subscribers put together full outfits and sped up the web site, amid other tweaks.

“We’re seeing very nice momentum coming out of the additional item launch,” Hyman said. “And I believe when you look beyond just the metrics, we’re seeing that the client is worked up, she’s engaging more, our traffic is up. She is worked up in regards to the proven fact that Rent the Runway goes to be delivering more value to her all year long and is targeted on improving her experience.” 

The corporate has been making big changes on the back end as well, shedding 24 percent of its corporate workforce in September and cutting annual operating costs by $25 million to $27 million. 

“Because we’ve built this really scalable infrastructure for the corporate, since the business is in an excellent place financially in 2023, we’ve been capable of take the vast majority of our company resources and put them towards innovation for the client experience,” Hyman said. “Now we have most people at this company focused on, How will we improve and innovate how customers experience Rent the Runway? And we consider that the best way that we get to profitability is by growing our subscriber count.”

Within the fourth quarter, Rent the Runway’s net losses narrowed to $26.2 million, or 34.7 percent of revenues, from $39.3 million, or 61.3 percent of revenues, a yr earlier. 

Adjusted earnings before interest, taxes, depreciation and amortization tallied $7.1 million and compared with losses of $5.5 million on the identical basis within the fourth quarter of 2021.

Revenues for the three months ended Jan. 31 increased 17.6 percent to $75.4 million — barely higher than the 17.4 percent growth analysts anticipated.