According to the Complaint, Rent the Runway, Inc. ("RTR") is an e-commerce platform that allows users to rent, subscribe, or buy designer apparel and accessories. This is a securities class action on behalf of all persons or entities who purchased RTR Class A common stock in or traceable to the Company’s October 2021 initial public offering.
The Complaint alleges that in the months leading up to the IPO, Rent the Runway claimed that it was experiencing a business resurgence as concerns about the COVID-19 pandemic lessened, lockdown orders ceased, and its customers engaged in more social outings.
However, the Complaint further alleges that the IPO’s offering documents failed to disclose the following material facts: (i) Rent the Runway was continuing to face extraordinary business headwinds, such as transportation headwinds and labor wage rate increases, from the COVID-19 pandemic; (ii) Rent the Runway’s active subscriber enrollments had sharply decelerated from the growth trajectory represented in the offering documents and, as a result, Rent the Runway was several months away from approaching its pre-pandemic levels of active subscriptions; (iii) Rent the Runway needed to substantially increase marketing and advertising costs from historical figures in order to attempt to grow its active subscriber network; (iv) Rent the Runway was suffering from ballooning fulfillment and transportation costs; and (v) as a result, Rent the Runway was suffering accelerating operational losses at the time of the IPO and was far less likely to achieve profitability in the near term, if ever, than represented.
On June 8, 2023, the Court issued an Order appointing Lead Plaintiff and Counsel. Lead Plaintiff filed an amended Complaint on August 21. On September 5, Lead Plaintiff corrected the amended Complaint.