The insight: Clothing rental services are in the midst of a resurgence.

• Rent the Runway ended Q1 with a record number of subscribers—over 147,000—and its strongest quarterly retention rate in four years.
• As of May, Urban Outfitters-owned Nuuly had more than 380,000 active subscribers, with 40,000 signing on in Q1 alone.

Looking ahead: Both companies expect the momentum to continue, as the business model’s value proposition makes it highly attractive to shoppers looking to stay stylish without breaking the bank.

• Urban Outfitters expects “healthy double-digit revenue and profit growth” from Nuuly in Q2, following a 60% revenue surge in Q1.
• Rent the Runway anticipates double-digit subscriber growth this year from its aggressive efforts to increase inventory and improve the customer experience.

Tariffs could be a tailwind, as rising prices for apparel make renting a more appealing proposition for price-conscious consumers. At the same time, customers could easily decide that the expense of a monthly subscription—$98 for Nuuly, and $94 to $144 for Rent the Runway—is one they can easily cut should budgets become strained.

Our take: It’s taken time for companies to prove that the clothing subscription model can be sustainable. While Nuuly was the first to reach profitability, Rent the Runway’s rebound shows that there is an appetite for rental services that can deliver high-quality products at an affordable price point, as well as capitalize on consumers’ desire for newness.

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