Wed. Dec 6th, 2023
    The Rise of Nuuly: Urban Outfitters’ Clothing Rental Service Redefines Profitability in the Industry

    Nuuly, Urban Outfitters’ clothing rental service, has achieved a significant milestone by turning a profit for the first time in its history. This accomplishment places Nuuly ahead of its competitor Rent the Runway, which has yet to reach profitability even after 15 years in operation. With a remarkable 86% increase in revenue and a steady influx of new subscribers, Nuuly’s success highlights the growing potential of the clothing rental market.

    During its fiscal third quarter, which ended on October 31, Nuuly reported $65.5 million in revenue and an operating profit of $300,000. These figures represent a significant improvement compared to the same period last year, where Nuuly had $35.3 million in revenue and an operating loss of $3 million.

    The achievement of profitability was a fundamental goal for Nuuly since its launch in 2019, as the logistics of the rental business have made it challenging to generate sustainable profits. However, Nuuly’s success demonstrates the brand’s ability to overcome these obstacles and build a profitable clothing rental platform. David Hayne, Nuuly’s president and Urban’s chief technology officer, expressed the company’s satisfaction in accomplishing their initial vision.

    Nuuly’s rise to prominence among Gen Z and Millennial consumers has occurred simultaneously with Rent the Runway’s struggles to achieve profitability. Nuuly currently boasts an active subscriber count of 198,000, surpassing Rent the Runway’s 137,566 subscribers as of July 31.

    The key to Nuuly’s profitability lies in its partnership with Urban Outfitters’ broader business. By leveraging Urban’s extensive inventory and resources, Nuuly is able to operate more efficiently compared to its competitors. Rent the Runway responded to Nuuly’s achievement by noting that their definition of profitability differs and emphasized its stronger unit economics and higher sales compared to Nuuly.

    As the clothing rental market continues to evolve, both Nuuly and Rent the Runway are focusing on expanding their assortments to cater to a variety of consumer needs. While Rent the Runway places an emphasis on high-end designer brands, Nuuly initially offered a more casual selection for everyday wear but has since expanded its offerings. The ability to provide a diverse assortment is vital in persuading consumers to choose rental services over traditional purchasing.

    In conclusion, Nuuly’s triumph in achieving profitability not only solidifies its position as a leader in the clothing rental industry but also serves as a testament to the sector’s immense potential. By capitalizing on the growing demand for rental services and adapting to consumers’ changing preferences, Nuuly has set a new standard for profitability in the market.


    1. How did Nuuly achieve profitability?

    Nuuly was able to achieve profitability by leveraging the resources and inventory of its parent company, Urban Outfitters, which allowed for more efficient operations compared to its competitors.

    2. How does Nuuly compare to Rent the Runway?

    Nuuly surpassed Rent the Runway in terms of active subscribers and achieved profitability before its rival. While Rent the Runway focuses on high-end designer brands, Nuuly initially targeted a more casual market but has since expanded its offerings.

    3. What is driving the growth of the clothing rental market?

    The clothing rental market is experiencing growth due to the rising demand for sustainable and cost-effective fashion options. Offering a wide-ranging assortment has proven crucial in convincing consumers to choose rental services instead of traditional purchasing.