Rent the Runway, Inc.RENT
Rent the Runway, Inc. Leases Disclosure
Leases - Lessee Accounting
As a lessee, the Company has operating real estate leases for its operational facilities, retail locations and corporate headquarters. The Company has operating and finance leases for its computers and equipment. Additionally, the Company procures a portion of its rental product from brand partners under revenue share arrangements, which are considered operating leases. All revenue share payments are recognized as variable lease costs and recorded in Rental product depreciation and revenue share in the Consolidated Statements of Operations.
The Company’s real estate and equipment lease terms generally range from less than one year to 14 years and certain agreements include renewal options. To the extent that the Company is reasonably certain to exercise a lease renewal option, the assumption is included in the calculation of ROU assets and lease liabilities.
During the year ended January 31, 2023, the Company amended the operating lease for its corporate headquarters in Brooklyn, NY, the terms of which terminated one floor of the leased space. The partial lease termination of the corporate headquarters leased space resulted in a reduction of $10.6 million in the Company’s future minimum fixed lease obligations as of the lease modification date. The Company treated the partial lease termination amendment as a lease modification as of the effective date which resulted in an adjustment of $3.7 million and $1.4 million to the related lease liabilities and right-of-use assets, respectively. The Company recorded a gain on the partial termination of $1.8 million and a loss on surrender of the related fixed assets, primarily leasehold improvements, of $1.9 million, both of which are recorded on the Consolidated Statements of Operations within General and administrative expenses.
During the year ended January 31, 2024, the Company amended the operating lease for its fulfillment center at 100 Metro Way in Secaucus, NJ, the terms of which extended the lease for an additional five years to August 31, 2029. The lease modification resulted in an adjustment of $9.9 million to lease liabilities and right-of-use assets. The Company did not exercise its renewal option with respect to its lease for 55 Metro Way in Secaucus, NJ, which expired in accordance with its terms on August 31, 2024.
During the year ended January 31, 2025, the Company entered into a sublease agreement for the ninth floor of its corporate headquarters in Brooklyn, NY for the remainder of the lease term through November 2032. The sublease commenced in December 2024 and does not relieve the Company of its primary lease obligations. The Company recorded immaterial additional assets for the sublease and the net amount received from the sublease is recorded in general and administrative expenses on the Consolidated Statements of Operations. As a result of the ninth floor sublease, the Company concluded that a triggering event had occurred and performed an impairment analysis of the related ROU asset group. The Company performed a quantitative assessment using the undiscounted future cash flows expected to be generated by the sublease. Based on the quantitative assessment, the undiscounted cash flows expected to be generated by the ROU asset exceeded its carrying value. As a result, no impairment was recognized for the year ended January 31, 2025.
As of January 31, 2025 and 2024, the weighted-average remaining lease term for operating leases was 6.58 years and 7.50 years, respectively, and the weighted-average discount rate was 16.11% and 16.12%, respectively. As of January 31, 2025 and 2024, the weighted-average remaining lease term for financing leases was 5.92 years and 4.73 years, respectively, and weighted-average discount rate was 16.62% and 16.44%, respectively.
The following table summarizes the components of lease costs incurred by the Company during the years ended January 31, 2025, 2024 and 2023:
| January 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Operating lease costs | $ | 10.1 | $ | 9.6 | $ | 11.3 | |||||||||||
| Short-term lease costs | — | — | — | ||||||||||||||
| Total fixed lease costs | 10.1 | 9.6 | 11.3 | ||||||||||||||
| Variable lease costs | 40.9 | 33.4 | 30.7 | ||||||||||||||
| Total lease costs | 51.0 | 43.0 | 42.0 | ||||||||||||||
| Sublease income | (2.0) | (1.8) | (3.2) | ||||||||||||||
| Total lease costs, net | $ | 49.0 | $ | 41.2 | $ | 38.8 | |||||||||||
The following table summarizes the Company’s minimum fixed lease obligations under existing agreements as a lessee, excluding variable payments and short-term lease payments, as of January 31, 2025:
| Operating | Financing | ||||||||||
| Fiscal year: | |||||||||||
| 2025 | $ | 11.4 | $ | 0.3 | |||||||
| 2026 | 11.5 | 0.1 | |||||||||
| 2027 | 11.2 | 0.1 | |||||||||
| 2028 | 11.3 | 0.1 | |||||||||
| 2029 | 10.0 | 0.1 | |||||||||
| Thereafter | 18.9 | 0.2 | |||||||||
| Total minimum lease payments | 74.3 | 0.9 | |||||||||
| Imputed interest | (28.6) | (0.3) | |||||||||
| Lease liabilities as of | $ | 45.7 | $ | 0.6 | |||||||
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About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.