Q4 2024 Rent the Runway Inc Earnings Call
and Javier Riera, Gonzalo Rotaeche, Marta Noguer.
Speaker Change: A reminder, this conference is being recorded I would now like to turn the call over to rent the friendly's chief legal and administrative officer Cara Chambray. Thank you you may begin.
Speaker Change: Good morning, everyone and thanks for joining us today. During this call we will make references to our Q4 and fiscal year 'twenty 'twenty four earnings presentation, which can be found in the events and presentations section of our Investor Relations website.
Speaker Change: Before we begin we'd like to remind you that this call will include forward looking statements. These statements include guidance and underlying assumptions for the first quarter 'twenty 'twenty five in fiscal year 2025, and statements regarding the impact of our business strategies and plans our ability to drive subscriber growth and customer loyalty in a cost efficient manner and our planned increases in.
Speaker Change: Inventory.
Speaker Change: These statements are subject to various risks uncertainties and assumptions that could cause our actual results to differ materially. These risks uncertainties and assumptions are detailed in today's press release as well as our filings with the SEC, including our Form 10-K that we plan to file later today, we undertake no obligation to update any forward looking statements or information except as required.
Speaker Change: Mired by law.
Speaker Change: During this call. We will also reference certain non-GAAP financial information and the presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for financial information presented in accordance with GAAP reconciliations of GAAP to non-GAAP measures can be found in our press release slide presentation posted on our investor website and in our SEC.
Speaker Change: SEC filings and with that I'll turn it over to John.
John: Thank you Kara and thank you to everyone for joining today in Q4, we officially March 15 years since we founded rent the runway to disrupt the retail and fashion industry. In those 15 years, we have not only created a new market category inspiring competitors in making clothing rental mainstream but we have built a loyal following of women who we are.
John: Power every day through our platform as we've shared over the last few quarters, we've been executing against our multiyear transformation plan and after several years of increased financial discipline. We believe we are now operating from steadier financial footing.
John: Most notably we've proven that we can operate a sustainable nearly breakeven business, we've significantly improved our cash position from a decline of $75 million in fiscal year 2023 to a decline of only $6 6 million at the end of fiscal year 'twenty 'twenty four resulting.
John: And record low cash consumption. It is important to highlight that the timing of certain cash flow items were outside our control and slipped into February in fact by the end of February our cash position was only $2.8 million lower than the end of fiscal year 2023 with our business operations. It is.
John: Solid position, we believe proving to you and ourselves that we can exercise strong financial discipline. It is now time for rent the runway to look to the future our data over the last five years has led us to believe that an investment in inventory is the greatest lever to unlocking customer growth and supporting customers.
John: Or retention, while we expect that this investment will impact our cash consumption in the year ahead. We believe this is an important investment we need to make for the future success of rent the runway and by applying the same principles that allowed us to reduce our cash consumption in fiscal year 'twenty 'twenty four we plan to pursue a disciplined growth strategy.
John: G rather than growth at all costs before we walk you through last quarter's financials I wanted to take a moment to highlight the progress we've made across the three key pillars of our cultural transformation that underpin our overarching growth strategy. This includes one a rejuvenated and customer obsessed.
John: Team, two improved customer loyalty and retention and three stronger cost discipline.
John: One a rejuvenated and customer obsessed team first I want to talk about the talent and culture transformation underway at rent the runway now more than ever before our energy is focused on innovation and growth to this and I'm focused on steering the culture of this company back to our founder led entrepreneur.
John: Oriel and customer obsessed routes, we believe that our data has demonstrated over the past 15 years that our growth opportunity is directly related to customer satisfaction and loyalty and by re instilling passion and energy for our customer back into everything we do I'm confident in our team's capability to deliver.
John: To serve our business goals, we've reorganized our company structure into four cross functional pods that directly align with our strategy.
Pension revenue customer growth and inventory this new structure has allowed us to dramatically simplify our goals and be more agile in the way, we launch new products and serve our customers, we're encouraging a more collaborative and solutions oriented internal culture. So there is synergy between our technical and consumer facing teams.
John: As a result of this new way of working together I believe that we are identifying and executing innovation opportunities faster and more efficiently than ever before with this new alignment. We're also creating new rituals and avenues to connect with our customers directly and we are doubling down on our commitment to personal human centered customer.
John: Your service, we've always taken great pride in the strength of our customer service consistently maintaining a seesaw, which is customer satisfaction score between 80 and 90% over the past three years. We've also heard from customers that customer experience is one of their favorite things about rent the runway.
John: Yeah.
John: With our rejuvenated customer obsessed lens, we believe there's even more our customer service team couldn't be doing that's why we've restructured our customer service team from a team that has traditionally spent 100% of their time reactively solving customer problems like fit we're shipping issues to a team that outspend, 14% of their time on.
John: Proactive customer engagement and selling in order to drive loyalty for instance, about 50% of new customers now get a phone call from customer service.
John: After they join to explain the key features of our rent the runway subscription and answer questions as.
John: As well as mid month and end of month check ins. So we can ensure they have a great experience in those crucial early days after sign up as we push forward, we'll be working hard to find new ways to reconnect with our customers in just the first few weeks of 2025, we've launched a number of initiatives that are already receiving positive positive feedback and high customer engagement.
John: We've invited customers, who are company all hands meetings to talk about their experience and invited them to focus groups that we open up to the whole company. So everyone can hear directly from our customers to build excitement about our new inventory investment we've hosted events online and offline for our customers, including our customer town Hall in our New York Office.
John: And then ask me anything conversation on Reddit and recently over three days in March every employee regardless of their role participated in a phone calling campaign to win back churn customers and get their feedback.
John: Last but not least I'm, particularly proud of the exceptional team that is now in place to help me lead rent the runway into this next phase of growth. We have both hired new talent to add new skill sets and strength to the team as well as reinvigorated our existing team to ensure everyone is doing the work the taps into their greatest rates today.
John: I firmly believe that we have the most talented team we've had in years and we're making sure every individual is being fully utilized I have great conviction in this team to loyalty and retention.
John: Next I want to talk about our laser focused commitment to strengthening customer loyalty loyalty and retention. After 15 years of operations rent. The runway has an extraordinary amount of data and customer feedback, which guides us as we make decisions. The piece of feedback we've heard repeatedly from customers is they want more they have a clear up.
John: Ask better inventory more selection more depth of styles more new designers and more clothing. They can wear for specific use cases inventory is also cited as the top reason why customers leave rent the runway. So in 'twenty 'twenty four we began making a calculated investment to improve the depth of our inventory.
John: And so on 8% improvement in customer loyalty the combination of our underlying data and this uptick in customer loyalty supports our conviction that inventory is the key to unlocking customer loyalty. We also know from our data that customers don't just want more in the way of quantity. They also.
John: One aspirational designer brands like Le Johnson, Donnie and Veronica Beard, our customers are women, who are sophisticated and come to rent the runway to find new fashion and exclusive designer collaborations that are only available here our rich data shows us the most desired brands on our platform and these brand partners our incentives.
John: To work with us as a marketing channel to reach their consumers to that end I'm thrilled to share that we've officially embarked on our largest inventory investment in the company's history in 2025, we plan to add two times.
John: New inventory units year over year of three to four times increase in units on average from key brands, most desired by customers, including some of the most desired brands and fashion like Hulu Johnson, Veronica Beard and start.
John: The increase in our exclusive design collections, including Ghani, Simon Miller, Agua been Dita, and Rick So 75% more new styles year over year 83, new brands and more new arrivals during periods of the year that were previously light on newness like deep summer and deep winter.
John: The new inventory started flowing onto rent the runway site in late February and we officially announced this new investment to customers on March 8th in a campaign called we heard you are launch emphasized that we have listened to our customers and are committed to giving her the inventory options. She wants as part of this campaign.
John: Spoke directly to and with our customers, creating moments of honest engagement with them together feedback both positive and constructive for example, I gave out my real personal email address and ask customers to send me feedback and they did I received hundreds of emails from customers, giving me real feedback on how rent the runway is change.
John: Their lives and what we can be doing better.
John: Already customers are feeling the newness the number of new items in her shipment is expected to increase approximately 75% this year versus last year and because we are buying new inventory throughout the year customers can expect to feel this newness every month and see new styles on our site every week with more inventory she has a higher probability of.
John: The item she wants and availability of the items. She loves in addition to the new inventory and in anticipation of new and returning customers visiting our platform. We've rolled out meaningful changes designed to improve the entire customer experience with rent the runway from the new client onboarding experience to new technology notifications.
John: Our ability to innovate and ship product updates faster than ever before is not only the result of our restructured team, but also the result of our renewed commitment to make sure that everything we do as a company is being driven by customer feedback.
John: In Q1, 'twenty twenty-five we've launched one.
John: More personalized customer onboarding experience, where members of our customer service team call new customers personally to provide an overview of their subscription and answer questions to new inventory highlights to make it easier for customers to find new inventory more efficiently three a 60 day customer promise, giving new members.
John: Risk free renting for their first two months and there's more in our pipeline, including enhancements to our Bakken stock notifications to send customers a notification when their size and a certain style becomes available. We first launched this in Q1 2025 for items customers hard it and are excited about this expansion, which is our number one most.
John: Requested new feature stylus and product launching this week, which connects customers to a stylist overtaxed or zoom to help guide her selection of styles personalized recommendations, which allow customers to share specific events coming up in their calendars. So rent the runway can proactively recommend the best styles to meet their needs together.
John: We believe that all of these activities reinforce one thing rent the runway has an important role to play in the lives of our many passionate customers and if we continue listening to them and delivering on what they want we will be able to prove we have a best in class customer loyalty and retention strategy.
John: Three cost discipline, well lets see I want to talk about our cost discipline and how we expect to be able to make new investments in our inventory in a sustainable way over the next few years.
John: After 15 years of pioneering this industry in building deep long standing partnerships with some of the worlds most recognizable fashion brands. We believe that rent the runway is uniquely positioned and capable of developing innovative solutions to acquire new inventory at a fraction of traditional procurement costs. We have developed two key channels too.
John: Acquired new inventory a revenue share model and exclusive designs again, we are focused on disciplined growth not growth at all costs and believe that these cost efficient channels will be the key to how we grow while maintaining our cost discipline, our revenue share model called share by our T. R allows us to acquire inventory.
John: From leading designers and brands at zero or low upfront cost and share revenue overtime designers love. This model as rent the runway to conserve as a powerful marketing channel for that share by our tier units are expected to increase to approximately 62% of total units in fiscal year 2025.
John: 2.5 X increase versus fiscal year 2024, underscoring the popularity with brands and success of the model. We continue to look to our data to find the new brands that our customers loved the most and are excited to be launching new exclusive collaborations with our customers favorite designers many of our.
John: Lucid design brands, our high end brands that would normally be cost prohibitive to buy at the quantities, we want for our customer base. However for these collections, we shared data with brands and work hand in hand with them on design and manufacturing, allowing us to buy inventory from them at about half the wholesale price we're already.
John: Working with 15 brands in the first half of 2025, including customer favorites like Simon Miller, Donnie Pat Bowe see New York and Agua been teed up.
John: It's important to know that these new exclusive capsule collections for rent the runway customers adhere to strict quality standards and grow and go through rigorous design reviews directly with the designers our design partners want to make sure that the exclusive they put up on rent the runway represent their best.
John: Forward to a new customer base similar to the share by RTR inventory acquisition program. We truly believe that this model is a win win for the designers and for rent the runway rent the runway to deliver coveted high quality brands to our customers, while the brands gain a marketing channel to gain visibility with new customers.
John: Through these channels, we've been able to source inventory at significantly lower cost than traditional wholesale channel proving we can use these new models to acquire inventory without drastically increasing cash expenditures. We believe that early signs are showing the strategy is working and we anticipate our subscriber growth to accelerate in 2025.
John: Rent the runway has inspired many competitors, we believe that the quality and breadth of the designers on our platform is unmatched our vision moving forward is to evolve rent the runway into a discovery engine for consumers to find the latest and greatest in designer fashion, we know that many of our key brands already see rent the runway is an effective and alternative.
John: Marketing channel, which we are looking forward to leveraging in our ongoing inventory acquisition strategy as we look towards the future of rent. The runway. We believe we're entering a new era.
John: We plan to make bold moves to give current and potential members more of what they want we're excited for what the future will bring and I look forward to answering your questions with that I'll hand, it over to Ted.
Ted: Thanks, Jen and thanks, everyone for joining us I will focus my remarks today on three areas first I will provide some commentary on fiscal 2024 and why we think it was an important year for rent the runway second I will outline the financial implications and rationale for what we believe are a bold and trajectory altering plan.
Ted: For fiscal year, 2025, finally, I will provide a high level view of how we think about the business beyond fiscal year 2025, let me begin with fiscal year 2024.
Ted: As John outlined in his remarks, we showed that restaurant, we can operate at close to breakeven levels of cash consumption, while maintaining a steady revenue base. This was achieved through improvements in our cost structure through our ability to purchase inventory on attractive terms and through improvements in working capital in particular, we made considerable progress in our ability.
Ted: To source inventory through our share by RTR program with approximately 50% of total inventory purchases coming through this channel a greater number of brands view us as important to their marketing strategy and the growth in that customer base.
Ted: As I will outline shortly unlocking more share by Ark. Your inventory is the backbone behind our strategy to almost double inventory purchases in fiscal year 2025, I will now review results for the fourth quarter before outlining our plans for fiscal 'twenty five.
Ted: We ended Q4, 'twenty four with 119778, ending active subscribers down approximately four 9% year over year average active subscribers during the quarter was 126148 versus 128840 subscribers in the prior year.
Ted: A decrease of two 1%.
Ted: Ending active subscribers decreased from 132518 subscribers at the end of Q3, 2024, due primarily to sequentially lower subscriber acquisitions lower.
Ted: Lower subscriber acquisitions were influenced by a significant reduction in paid marketing spending in addition to normal seasonality.
Ted: As part of developing our plans for fiscal year 2025, we reduced marketing spending in the fourth quarter to understand both the effectiveness and incremental <unk> of our paid marketing expenditures, while those reductions did affect short term results. They provided learnings that informed our strategy for fiscal year 'twenty five.
Ted: Total revenue for the quarter was $76 $4 million up zero point $6 million or 8% year over year, and up zero point $5 million or 7% quarter over quarter subscription and reserved rental revenue was down one 2% year over year in Q4, 24, primarily due to lower average subscribers.
Ted: Partially offset by higher reserve revenue versus Q4 'twenty three.
Ted: Other revenue increased 13, 5% or $1 $4 million year over year.
Fulfillment expenses were $22 million in Q4, 24 versus $21 million in Q4, 23, and $21 $4 million in Q3, 24 fulfillment expenses as a percentage of revenue was slightly lower year over year at 26, 4% of revenue in Q4 24 compared to $26.
Ted: 5% of revenue in Q4, 'twenty three fulfillment expenses benefited from higher resale revenue and continued warehouse efficiencies, partially offset by higher transportation costs per order.
Ted: Gross margins were 37, 7% in Q4 24 versus 39, 4% in Q4, 23, Q4, 24 gross margins reflect higher revenue share costs as a percentage of revenue due to the greater proportion of share by RT our inventory.
Q4, 24 gross margins increased quarter over quarter to 37, 7% from 34, 7% in Q3 24 due to seasonally lower revenue share payments combined with lower fulfillment cost as a percentage of revenue.
Ted: Operating expenses in Q4, 'twenty, four with 28% lower year over year, due primarily to lower marketing expenses and the favorable impact of our cost reduction efforts and lower stock based compensation expenses totaled.
Ted: Total operating expenses, which includes technology marketing and G&A were 44% of revenue in Q4 24 versus 55, 9% of revenue in Q4, 23, and 48, 7% of revenue in Q3 'twenty four.
Ted: Adjusted EBITDA for the quarter was $17 $4 million or 22, 8% of revenue versus $11 $2 million or 14, 8% of revenue in the prior year.
Ted: Adjusted EBITDA for the 12 months ended January 31, 2025 was approximately $46 $9 million or 15, 3% of revenue versus $26 $9 million or 9% of revenue in the prior year.
Ted: Adjusted EBITDA improvement for Q4, 24 versus Q4 23 reflects the impact of lower marketing expenses are fixed cost reduction efforts and higher revenue, partially offset by higher revenue share payments due to a greater proportion of revenue share units.
Ted: Free cash flow for Q4, 24 was positive $2 $1 million versus negative $23 million in Q4, 'twenty three due primarily to lower cost of rental product and higher profitability free.
Ted: Free cash flow for the 12 months ended January 31, 2025 was negative $7 $2 million versus negative $73 million in the 12 months ended January 31 2024.
Ted: While free cash flow for fiscal year, 2024 fell short of breakeven timing of cash flow associated with items, such as tax credits and vendor incentives renegotiations played a key role in the shortfall.
Ted: In fact, our ending unrestricted cash balance at the end of February 2025 was $81 $2 million a decline of just $2 $8 million versus unrestricted cash at the end of fiscal year 2023.
Ted: I will now discuss the financial implications off and the rationale for our plans for fiscal year 2025.
Ted: While we've clearly demonstrated that rent the runway can operate at close to breakeven levels with steady revenue growth in our subscriber base is key to creating significant value.
Ted: Growth beyond the 132574 average active subscribers, we had in fiscal year 'twenty 'twenty four is necessary to leverage our fixed cost base importantly, given our strong unit economics, we believe growth produces attractive cash flow.
Ted: As Jim outlined in his remarks, we believe improving our customers' experience with inventory is required to ignite subscriber growth.
Ted: Further we believe that a substantial increase in inventory and fiscal year 2025 as required to meaningfully improve customer satisfaction, especially as the inventory will continue to build through the course of the year. The good news is that we utilize the inventory over multiple years and we believe this year's inventory investment will continue to pay dividend.
Ted: Beyond fiscal year 2025. Additionally, our brand partners are willing to provide about 62% of these units under share by RTL arrangements, reducing both the risk and cost in fiscal year 2025, we are accelerating our progress towards a truly capital light business model.
Ted: I will outline shortly while we expect investment will result in subscriber growth. It will mean increased cash consumption for fiscal year 2025. The reason for this is twofold first we expect subscribers to build over the course of the year as the new inventory arrives and retention improves this means average subscribers will lag.
Ted: Ending subscribers.
Ted: We believe that fiscal 2025 will require a step up in our inventory base to improve the experience for current subscribers. In addition to purchasing inventory for expected growth in subscribers and replenishing units for existing subscribers.
Ted: Going forward as the inventory base for existing subscribers will already be at satisfactory levels, we will likely only purchase inventory decatur cater to subscriber growth and to replenish units that are sold are damaged.
Ted: Combination of an expected higher subscriber base ending fiscal 'twenty, five and future inventory purchases that cater to subscriber growth and replenishment without the presence of step up units will drive future free cash flow note also that we expect the inventory experience to continue to improve beyond fiscal 2025.
Ted: As a result of the considerable investment we are making this year.
Ted: Moving onto guidance, we expect to deliver double digit ending active subscriber growth for fiscal year 2025. We also expect full year cash consumption to be between negative $30 million and negative $40 million.
Ted: We are providing an indicative range of free cash flow recognizing that there are many factors that may influence. The final result.
Ted: The message we want to send is that rent. The runway is playing offense and that we plan to invest prudently where it makes sense for customers.
Ted: Even if that results in cash flow outside that provided ranges.
Ted: There are also unknowns around the economy and tariffs as well as timing of potential customer retention improvements that can further affect actual results for fiscal year 'twenty five versus expectations. We.
Ted: We are not providing revenue and adjusted EBITDA guidance for the year.
Ted: Our focus is on growing subscribers and on prudently monitoring cash consumption.
Ted: Before discussing Q1 guidance I want to briefly discuss tariffs. This is a rapidly evolving situation and it is too soon to provide any predictions our guidance does not factor in any potential impact from tariffs given all the uncertainties.
Ted: We believe we are fortunate that we directly import a relatively small portion of inventory and have placed orders for the majority of our inventory receipts for fiscal year 'twenty. Five. However, there is no guarantee that this will mitigate any impact. It is also difficult to predict consumer behavior, but we believe renting does offer substantially.
Ted: Greater value for customers versus buying we are mindful that the environment remains uncertain and plan to operate prudently in the months ahead.
Ted: For Q1, we expect revenue to be between $68 million and $70 million.
Ted: We expect adjusted EBITDA to be between negative, 5% and negative 7% of revenue note that Q1 is affected negatively by a lower beginning of period subscriber base as well as higher inventory spending in Q1 versus the previous year.
Ted: In conclusion, we're pleased with our progress on profitability in fiscal year 2024, we believe it is time for us to invest and take advantage of the significant growth opportunity that we think lies ahead for rent the runway.
Ted: We will now take your questions.
Speaker Change: Thank you if he would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two to remove your question from the queue and for participants using speaker equipment may be necessary to pick up your handset before pressing the star.
Ted: Yes.
Ted: We ask that you. Please limit to one question and one follow up question one moment, while we poll for questions.
Speaker Change: Our first question is from Andrew Boone with JMP Securities. Please proceed.
Andrew Boone: Thanks, So much for taking my question. So can you help us understand the cash flow guidance.
Andrew Boone: Maybe the drivers of that it sounds like you guys are weaning increasingly into share by arch yard and so just help us understand what the significant capex is that opex kind of investing in marketing or what's behind kind of the range for <unk>.
Andrew Boone: Our free cash flow for 'twenty Park.
Andrew Boone: Yeah, I think there's a few things to call out a number one if you just look at the sheer volume of inventory, we're bringing onto the platform that inventory is almost doubling year over year. So that's the first component of it you're right that a lot of is 62% is coming via share about RTI program, but you also have to recognize that.
Andrew Boone: Given that a lot of the new inventory is going to be part of the share of our tiara program.
Andrew Boone: That inventory is going to get utilized and we're going to pay for it. This year. We have provided in the presentation capex guidance for the year of $70 million to $75 million, which obviously is a considerable increase.
Andrew Boone: From the levels that we have in fiscal 2024, So I think it's a combination of both higher capital expenditure as well as a significant increase almost to an opex in the share of our actually our inventory, which we believe will get utilized as we grow our subscriber base. The reason there is cash consumption. This year is again because of the two factors I mentioned.
Andrew Boone: And there's a lag between ending subscribers and average subscribers because its fiber build.
Andrew Boone: And the fact that we do we are buying a considerable considerably greater amount of units to spark growth in the customer base, but we think that will pay dividends in future years.
Andrew Boone: And then can you kind of provide a real time update on consumers. What have you guys seen more recently just given all the volatility in the headlines around tariffs and everything else. What how are consumers reacting to that are they are leaning into our charges given the value prop.
Andrew Boone: How should we think about just the consumer today.
Andrew Boone: I think if you look at what we are focused on.
Andrew Boone: Number one it's obviously look we're not going to make any prognostications about the economy about terrorists all of that there's a tremendous amount of uncertainty, but I think what I'm going to go back to what I said on the in the script, which is we think renting provides considerable value versus buying and then the the more important thing for us This year is.
Andrew Boone: Really listening to our customers I mean, the the amount of inventory, we're bringing on addresses the number one pinpoint and customers have we.
Andrew Boone: We are very excited given everything we know about the business in terms of the retention impact that that amount of inventory, we can drive and we think.
Andrew Boone: As I mentioned, we really are on the offense and we think that can make a considerable difference to growth in the business. This year, yeah and like we've said on earnings calls in the past the people that notice our strategy first are always the consumers who we already have so the base.
Andrew Boone: Of subscribers that are on our platform and visiting several times a week are the first ones to notice this doubling of the inventory they're seeing that we have three years to forex more units from their favorite brands. They see that they have a lot more newness that they're able to have.
Andrew Boone: In their baskets that are at home and their experience is kind of noticeably improving week over week month over month, and it's that community of subscribers that we expect and we hope will have an even better experience with rent the runway as evidenced by improved loyalty rates, but we also hope that that.
Andrew Boone: Restarts this organic flywheel in our business of these women being more excited about what we're doing sharing it with their friends and colleagues and not really starting kind of the growth flywheel for the business in terms of acquisition.
Andrew Boone: And we feel very good that this is the number one way to do this inventory is what we've learned over the past five years inventory is the number one factor in improving customer loyalty.
Speaker Change: Can you speak to that point you guys invested in inventory in the past is this just a step function change or how do we think about the customer experience changing in 2025. This is a tremendous.
Speaker Change: It's a tremendous step function change, we're doubling the number of new units on the platform this year versus last year.
Speaker Change: The customer is going to in.
Speaker Change: The customer experience as a result of that is entirely different she is receiving hundreds of new arrivals onto the part for them every single week, so she's constantly coming and she's finding newness, which is what she loves about any rental platform she's finding way more up the brands that she loves the most why is that important because when she gets the shipment at her.
Speaker Change: Home with a blockbuster brand.
Speaker Change: She perceived that shipment is having higher value to her that makes her even more loyal we're having new arrivals come in as we said in the script during times of the year that were previously light on new arrivals like.
Speaker Change: The middle of summer.
Speaker Change: And not only are we having this new arrivals come in in the middle of the summer, but theyre new arrivals that are absolutely appropriate for the use cases that she's actually doing in the middle of the summer.
Speaker Change: And so we hope to see continued kind of usage of the product in those periods of time during the year, where in the past we had higher rates of churn. So I think the other thing that we said in the script that I just want to highlight is she has we expect her to have 75% more news.
Speaker Change: This in her at home basket and she had last year.
Speaker Change: That is a <unk>.
Speaker Change: Market change and her experience that our customers are noticing kind of right away and we feel fantastic about this strategy, what we did last year.
Speaker Change: We did make a.
Speaker Change: Change in our inventory strategy, where we focused on depth rather than breadth of selection, we saw that focusing on depth did improve our loyalty rate by 8% as we mentioned, but the quantity of units did not increase last year. It was the allocation of those units.
Speaker Change: That changed.
Speaker Change: Makes sense. Thank you so much.
Speaker Change: With no further questions in the queue. This will conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.
Speaker Change: Thank you everyone for joining us I appreciate it.
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