Rent The Runway Analyst Cuts Forecast By 75%: 'Customer Acquisition Will Take A Hit'

Shares of Rent the Runway Inc RENT Monday maintained their downtrend and have lost almost 70% year to date.

Although the New York-based company reported its second-quarter adjusted EBITDA ahead of expectations, its revenue and subscriber growth was disappointing, according to Telsey Advisory Group.

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The Rent the Runway Analyst: Dana Telsey downgraded the rating for to Market Perform, while cutting the price target from $4 to $1.

The Rent the Runway Thesis: Management, under the helm of CEO Jennifer Hyman, attributed the low subscriber retention to a lack of depth of inventory availability, Telsey said in the downgrade note.

The company is now focusing its strategy “away from assortment breadth to depth,” the analyst stated. “This shifted focus to improved in-stocks is expected to begin benefiting the customer experience later in the third quarter through to the first half of next year,” she added.

“In the meantime, the company also continues to prioritize profitability, with plans to reduce promotional activity, pull back on marketing, drive cost efficiencies, and focus more on rebuilding the higher-margin reserve business,” Telsey wrote. She further mentioned that customer acquisition will take a hit under these strategies.

RENT Price Action: Shares of Rent the Runway had declined by 9.18% to 89 cents at the time of publication Monday.

Photo: Kevin Moloney/Fortune Brainstorm TECH via Flickr