Rent the Runway is getting into the kids business

Key Points
  • Rent the Runway is going to start offering clothing for girls later this month.
  • That's after the rental platform recently received a new round of financing that increased its valuation to $1 billion.
Rent the Runway is getting into the kids business.
Source: Rent the Runway

Rent the Runway will soon offer clothing for kids, expanding the increasingly popular online rental platform beyond just apparel for women and recently the addition of home goods.

The girls' clothing will be available starting April 15, the company announced Friday. It will be for children's sizes ranging from 3Y to 10/12Y, and include items for everyday wear like tops for going to school, and dresses for special occasions like birthday parties and family photos. The kids clothing will be from 13 designer brands at launch, including Chloé, Fendi, Stella McCartney, Little Marc Jacobs and Philosophy, the company said.

"Our members have been requesting this for years," COO Maureen Sullivan told CNBC. "RTR Kids will offer a fun, practical and sustainable solution to getting the mini members of our community dressed."

The announcement comes after Rent the Runway ventured into the home business through a partnership with furniture retailer West Elm last month. It now offers home furnishings, like throw pillows and blankets, for rent on its website.

Rent the Runway also late last month received a new round of financing that increased its valuation to $1 billion. The start-up has raised $337 million to date.

With more than 10 million members today, Rent the Runway has grown more popular as a greater number of women find it appealing to swap out their clothes and accessories each month — or even as frequently as each week — to avoid only buying something to wear just once or twice and then leave it sitting in a closet. With a Rent the Runway membership, shoppers can try new brands and avoid repeating outfits, with monthly plans costing $89 and $159, depending on the frequency of exchanging items.

Meanwhile, the kids clothing industry today is ripe with change.

Apparel retailer Gymboree filed for Chapter 11 bankruptcy protection earlier this year and will be shutting hundreds of stores. The Children's Place in 2017 said it planned to close 300 locations by 2020. That disruption has opened the door for start-ups like online-based kids clothing retailer Rockets of Awesome to grow, targeting younger moms.

Rent the Runway also on Friday announced it will now allow its members to rent more items at once. Shoppers will be able to purchase extra "slots" to take out clothes or home goods at any given time, Rent the Runway said — for either $25 or $39 extra per month, depending on the membership plan.