Dive Brief:
- Apparel rental company Nuuly has “quickly become an industry leader,” with over twice the active subscribers as the next-largest apparel subscription business in the U.S., Rent the Runway, according to a Walls Fargo note lead by Ike Boruchow.
- The Urban Outfitters-owned company has captured subscribers that either previously used apparel rental or have never rented before. Most of its under 30 customers this year were new to rental.
- Nuuly also maintains one of the highest retention rates in the industry, with a 90% retention rate in year one and around a 40% retention rate in years three to five, per the report.
Dive Insight:
One of Nuuly’s most important competitive advantages is its ability to obtain inventory at cost from its sister companies, including Urban Outfitters, Anthropologie and Free People. Those products make up around 45% of its current inventory, according to Wells Fargo analysts.
In Urban Outfitters’ latest earnings, Nuuly’s net sales were $124.4 million — an almost 60% increase year over year. The company saw a 53% increase in average active subscribers, which contributed to a 60% increase in brand revenue and added almost 400 basis points of revenue growth to Urban Outfitters’ top line.
“The performance at Nuuly over the past year has fortified our confidence that our business model is strong, and the rental market opportunity is very large,” Urban Outfitters COO Frank Conforti said on a first quarter 2026 earnings call with analysts. “We are thrilled that Nuuly now appears to be leading the industry with an opportunity to continue to see significant growth. Based on our current plans, we believe Nuuly could deliver a healthy double-digit revenue and profit growth in the second quarter.”
Nuuly’s revenue surge comes as the apparel rental site sets its sights on a high sales goal. After turning a profit during its last fiscal year, Nuuly President Dave Hayne said the company aims to reach $500 million in sales this year, a milestone he called “an achievable goal.”
Urban Outfitters also recently expanded the brand’s fulfillment capacity. Last year, the company opened a 600,000-square-foot fulfillment center for Nuuly in Raymore, Missouri. The facility includes full laundering and clothing alteration capabilities and was expected to provide Nuuly with the capacity to triple its active subscriber base.
Competitor Rent the Runway recently reported that Q1 revenue fell 7.2% year over year to $69.6 million. Its average active subscribers dipped 2% from the year-ago quarter to 135,896.
Nuuly was launched in 2019 and offers 25,000 styles from over 500 brands and currently has around 380,000 subscribers.
