Rent the Runway could get a big bump from 2022 'wedding boom,' Jefferies says

Published Tue, Mar 29 20221:32 PM EDT

Shares for Rent the Runway could get a huge bump from this year's "wedding boom," according to Jefferies. The shared closet retailer could take advantage of the record number of weddings in 2022 to grow its subscriber base, according to equity analyst Ashley Helgans. "This massive event backlog provides [Rent the Runway] RTR with a significant opportunity to attract new users to the platform, as consumers look for occasion wear with one-time-use cases," Helgans wrote. "Each new 'Reserve' order (one-time rental) is an introduction to a potential subscriber." Roughly 2.6 million weddings are expected this year, the highest level since 1984, because of postponed trips down the aisle, the note said. Women are expected to attend an average of 3.8 weddings in 2022, according to Jefferies. A rebound in social events like weddings would help Rent the Runway, which saw the pandemic dampen consumer demand for designer wear. Last fall, shares for the retailer closed down 8% on its first trading day after its public debut. Year to date, Rent the Runway's stock price tumbled 21%. Still, as peak wedding season approaches later this year, Jefferies analysts found in a survey that half of consumers are looking forward to "dressing up" and choosing more fashion-forward outfits after mostly staying home during the pandemic. Other retailers such as Kohl's , Macy's , and Nordstrom also reported improving trends in the dress category, the note said. New customers attracted to the company's affordable prices for designer threads may stick around after getting comfortable with the apparent rental model, the note said. Historically, half of Rent the Runway's subscribers came from its reserve and resale offerings, according to the note. Higher inflation will also help the shared designer closet company. Women's dress prices went up 13% year over year in February, Jefferies said. Supply constraints that affect other traditional apparel retailers are less likely to hurt Rent the Runway's apparel rental model, analysts said. Jefferies initiated coverage on Rent the Runway earlier this month with a buy rating. Rent the Runway was issued a $13 price target, representing 102% upside from where shares closed on Monday. Shares for Rent the Runway dipped 1.6% during Tuesday trading. —CNBC's Michael Bloom contributed to this report.

While Rent The Runway closed its retail stores due to the pandemic, it still has a network of drop-off locations in major cities, including New York.

Shannon Stapleton | Reuters

Shares for Rent the Runway could get a huge bump from this year's "wedding boom," according to Jefferies.