By Niket Nishant
(Reuters) -Fashion company Rent the Runway was on Wednesday valued at $1.7 billion after its shares opened nearly 10% above their initial public offering price, the latest consumer-facing business to ace its market debut in the United States.
The company's site allows women to rent and shop secondhand clothes and accessories such as handbags and jewelry from more than 750 designer brands.
Consumers conscious of reducing clothing and environmental waste have driven up demand for secondhand clothes and rental services, while hybrid-working has eliminated the need to refresh wardrobes for office-going users.
High demand for its apparel rental model has helped the company cut its net loss to $84.7 million in the six months ended July 31, from $88 million a year earlier.
"Women didn't have to return to the office in order to return to Rent the Runway," Co-founder and Chief Executive Jennifer Hyman said in an interview with Reuters.
Changes to subscription plans to make them more personalized has also led to higher loyalty and margins, Hyman said.
Founded in 2009, Rent the Runway is backed by affiliates of Bain Capital Ventures and Ares Management (NYSE:ARES) Corp. Oscar-winning actress Gwyneth Paltrow is on its board and the firm has also set up a panel to oversee its ESG strategy.
In the recent months amid a surge in consumer demand, several consumer-facing businesses including eyewear company Warby Parker and Roger Federer-backed shoemaker On Holding AG have had strong market debuts.
Shares of Brooklyn, New York-based Rent the Runway opened at $23, up from its IPO price of $21 each. It sold 17 million shares to raise $357 million in its upsized share sale, which was priced at the top end of its initial range of $18 to $21.
Goldman Sachs & Co (NYSE:GS), Morgan Stanley (NYSE:MS) and Barclays (LON:BARC) Capital are the lead underwriters.