PHILADELPHIA - Urban Outfitters is launching a clothing rental service this summer targeting price-conscious and fashion forward customers who want an ever-changing wardrobe.
The new service, called, Nuuly, will be an $88 subscription for one box of six items. At launch, shoppers will be able to select from more than 1,000 styles from a variety of categories like denim, dresses, outerwear and vintage items.
With its new offering, Philadelphia-based Urban Outfitters joins similar services like Rent the Runway, Le Tote, and American Eagle's Style Drop trying to capitalize on a fast growing clothing rental market - estimated to grow from almost $1.3 billion now to more than $2.5 billion by 2023, according to market research firm GlobalData.
Subscribers can wear the clothes as many times as they want. Returned clothes would be dry cleaned before being rented out to the next customer.
Besides Urban Outfitters, subscribers will be able to choose from affiliated brands like Free People, Anthropologie, as well as other brands like Reebok, Fila, Champion, Universal Standard, Naadam, LoveShackFancy, Chufy, Gal Meets Glam, Ronny Kobo & Anna Sui.
Sizes will range from 00-26 and there will be petite and plus-sized apparel options. The company plans to add more than 100 styles per week and hopes to triple the amount of options by the end of the year. If a subscriber loves an item in the box, they can choose to purchase it.
The company estimates the retail value of one box to be more than $800, David Hayne, the company's chief digital officer and president of Nuuly, said on a recent earnings call with analysts.
"Nuuly seeks to further these shifting behaviors by giving subscribers access to a wide assortment of current fashion at a substantially lower cost per wear than retail," Hayne said on the call, "solving the paradox of a millennials quest for constant fashion newness, alongside the desire for a more sustainable lifestyle."
Nuuly is hopes to have about 50,000 subscribers within its first year, meaning it could exceed more than $50 million in annual revenue, Hayne said on the call.
On Tuesday, Urban Outfitters reported its first quarter earnings. Sales rose 1% to $864 million, for the three months ended April 30. Comparable retail sales at Free People rose 2 percent, and 1% at Anthropologie. Urban Outfitters's comparable retail sales were flat.
The company's stock is down about 18% this year to $27 at close yesterday.
Still, Jefferies analysts wrote in a note to investors that they see "a clear multi-year growth trajectory."
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