Rent the Runway (RENT) risk factors, FY2026 10-K

Rent the Runway's FY2026 10-K, filed Apr 14, 2026, lists 58 risk factors in 5 groups. Against the prior year's 54: 8 new, 4 dropped, 22 substantially reworded.

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Risk factors listed
585 groups
New this year
8vs 54 last year
Dropped
4since the prior 10-K
Substantially reworded
22of those kept
Section length
36k wordsItem 1A

What the changes say

  • Recapitalization transactions in October 2025 significantly reduced debt and added capital, but compliance issues and board transitions follow.

What changed since the prior 10-K

New

  • NewRisks Related to the Recapitalization Transactions

    We may fail to realize all of the anticipated benefits of the Recapitalization Transactions, or those benefits may be short-lived or insufficient for our future needs

    We may fail to realize the anticipated benefits of the October 2025 Recapitalization Transactions intended to reduce indebtedness and add capital.

  • NewRisks Related to the Recapitalization Transactions

    Failure to manage our Board transition and related changes could materially adversely affect our business

    The Board transition following the Recapitalization Transactions and ongoing efforts to designate a third Investor Group director could cause business uncertainty.

  • NewRisks Related to Our Business and Industry

    The global fashion industry is highly competitive and rapidly changing, and we may not be able to compete effectively

    We face intense competition in the global fashion industry across fashion rental, retail, and resale, requiring continuous customer and brand partner attraction.

  • NewRisks Related to Our Business and Industry

    Our use of AI may subject us to new or heightened legal, regulatory, ethical, operational or other challenges

    Our current and expanded use of AI exposes us to new legal, regulatory, ethical, and operational challenges, including potential flaws and algorithmic bias.

  • NewRisks Related to Ownership of Our Class A Common Stock

    We are currently noncompliant with Nasdaq Listing Rule 5605(c)(2)(A), which requires listed companies to have at least three audit committee members

    We are currently noncompliant with Nasdaq Listing Rule 5605(c)(2)(A) requiring at least three audit committee members.

  • NewRisks Related to Ownership of Our Class A Common Stock

    On October 28, 2025, we notified Nasdaq of our non-compliance with Nasdaq Listing Rule 5605(c)(2)(A), which requires that the Audit Committee be comprised of three independent directors, and our intent to rely on the cure period provided by Nasdaq Listing Rule 5605(c)(4)(B)

    Noncompliance with Nasdaq audit committee independence rules risks potential delisting, which could increase stock volatility and hinder capital raising.

  • NewRisks Related to Ownership of Our Class A Common Stock

    See Risks Related to the Recapitalization Transactions and “ Note 4 — Recapitalization Transactions ” in the Notes to the Consolidated Financial Statements for more information on the Recapitalization Transactions, including the sale and issuance of our common stock

    Substantial future sales or issuances of our common stock could harm our market price and severely dilute existing investors.

  • NewRisks Related to Ownership of Our Class A Common Stock

    These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of Class A common stock or other securities

    As a controlled company where CHS controls majority voting power, we rely on corporate governance exemptions reducing certain stockholder protections.

Dropped

  • DroppedRisks Related to Our Business and Industry

    We compete with other fashion rental companies and also with a range of traditional and online retail and resale fashion companies and we expect competition to continue to increase in the future. To be successful, we need to continue to attract and retain customers and brand partners

  • DroppedRisks Related to Our Business and Industry

    If we are not able to continue to improve our website and mobile app performance, keep pace with technological changes, enhance our current offerings, and develop new offerings in a timely way to respond to the changing needs of partners and customers, our business, financial performance, and growth may be harmed

    Competition with other fashion rental and retail companies to attract customers and brand partners.

  • DroppedRisks Related to Ownership of Our Class A Common Stock

    We are required to meet the continued listing requirements of the Nasdaq Global Market and other Nasdaq rules, including those regarding director independence and independent committee requirements, minimum share price and certain other corporate governance requirements

  • DroppedRisks Related to Ownership of Our Class A Common Stock

    Future sales of our common stock in the public market could cause our share price to fall

Reworded

  • 82% rewrittenRisks Related to Our Legal and Regulatory Environment

    Our ability to utilize our net operating loss carryforwards and certain other tax attributes to offset taxable income or taxes may be limited

    Updated federal and state net operating loss carryforward figures to $507.25 million and $537.91 million as of January 31, 2026.

  • 71% rewrittenRisks Related to Our Business and Industry

    Our level of indebtedness could have a material adverse effect on our ability to generate sufficient cash to fulfill our obligations under such indebtedness, to react to changes in our business and to incur additional indebtedness to fund future needs

    Updated borrowings under the New Credit Agreement to $156.6 million following the October 2025 Recapitalization Transactions.

  • 57% rewrittenRisks Related to Our Business and Industry

    If we fail to maintain and enhance our brand, our ability to attract and retain customers will be impaired and our business, financial condition, and results of operations may suffer

    Added disclosure stating we are underinvested in brand marketing and channel diversification relative to typical market practice and competitors.

  • 54% rewrittenRisks Related to Our Legal and Regulatory Environment

    We may incur costs to defend against, face liability or be vulnerable to intellectual property infringement, misappropriation, and other claims and allegations brought against us by others, which could result in substantial damages and diversion of management’s efforts and attention

    Added specific risks regarding unregistered trademarks and copyright clearance issues leading to potential third-party claims.

  • 52% rewrittenRisks Related to Our Business and Industry

    We may require additional capital to support the growth of our business and satisfy our debt obligations, and this capital might not be available on acceptable terms, if at all

    Retained the risk regarding the need for additional capital to support growth and satisfy debt obligations.

  • 49% rewrittenRisks Related to Our Business and Industry

    We rely on consumer discretionary spending and have been, and may in the future be, adversely affected by economic downturns and other macroeconomic conditions or trends

    Added volatility in tariff rates, global trade policies, and war in the Middle East as macroeconomic factors influencing consumer spending.

  • 47% rewrittenRisks Related to Our Business and Industry

    Our business is affected by seasonality

    Changed reference from the onset of COVID-19 to the COVID-19 pandemic regarding seasonal Reserve business variations.

  • 41% rewrittenRisks Related to Our Business and Industry

    Material changes in the pricing practices of our brand and manufacturing partners and/or the costs of raw materials could negatively impact our profitability

    Retained baseline risks regarding raw material cost inflation for petroleum-based products and cotton impacting margins.

  • 40% rewrittenRisks Related to Our Business and Industry

    We have a history of losses, and we may be unable to achieve or sustain profitability

  • 38% rewrittenRisks Related to Our Business and Industry

    Our New Credit Agreement contains covenants and other restrictions on our actions that may limit our operational flexibility or otherwise adversely affect our business, financial condition and results of operations

    Was: Our 2025 Amended Facility contains financial covenants and other restrictions on our actions that may limit our operational flexibility or otherwise adversely affect our business, financial condition and results of operations

  • 38% rewrittenRisks Related to Our Legal and Regulatory Environment

    Failure to adequately obtain, maintain, protect and enforce our intellectual property and proprietary rights could harm our brand, devalue our proprietary content, and adversely affect our ability to compete effectively

  • 36% rewrittenRisks Related to Our Business and Industry

    We face risks arising from cost-cutting and restructuring of our operations, which could adversely affect our financial condition, results of operations, cash flows, or business reputation

    Was: We face risks arising from the restructuring of our operations, which could adversely affect our financial condition, results of operations, cash flows, or business reputation

  • 35% rewrittenRisks Related to Our Business and Industry

    If we are unable to drive future growth or manage our growth effectively, our brand, Company culture, and financial performance may suffer

  • 34% rewrittenRisks Related to Our Business and Industry

    Our partners and customers may not be satisfied with our technological or other platform enhancements or new offerings or may perceive that these offerings do not respond to their needs or create value for them. Our customers may also be dissatisfied with the product mix we currently offer or will offer in the future

  • 31% rewrittenRisks Related to Our Business and Industry

    A high proportion of our revenue comes from longer-tenured subscribers. A decrease in the number of customers, their tenures with us, and/or a reduction in the amount customers spend on our offerings could negatively affect our operating results

  • 30% rewrittenRisks Related to Our Legal and Regulatory Environment

    We could incur significant liabilities related to, and significant costs in complying with, environmental, health and safety laws and regulations

  • 27% rewrittenRisks Related to Our Business and Industry

    We rely on the experience and expertise of our Co-Founder and Chief Executive Officer, senior management team, key technical and strategic employees and hourly personnel

  • 25% rewrittenRisks Related to Our Legal and Regulatory Environment

    Our use of third-party open-source software could adversely affect our ability to offer our products and offerings and subjects us to possible litigation

  • 25% rewrittenRisks Related to Our Business and Industry

    We did not design and maintain effective controls to ensure (i) the appropriate segregation of duties in the operation of manual controls and (ii) journal entries were reviewed at the appropriate level of precision

  • 24% rewrittenRisks Related to Our Business and Industry

    We believe that our Company culture has contributed to our success and if we cannot maintain this culture as we grow, our business could be harmed

  • 21% rewrittenRisks Related to Ownership of Our Class A Common Stock

    We are an “emerging growth company” and a “smaller reporting company,” and we cannot be certain if the reduced reporting and disclosure requirements applicable to emerging growth companies and smaller reporting companies will make our Class A common stock less attractive to investors

  • 21% rewrittenRisks Related to Our Business and Industry

    Any significant technology disruption or failure, cyberattack or data security incident could adversely affect our business, financial condition and operations

All 58 risk factors

Headings as the filing states them, in filing order.

Risks Related to the Recapitalization Transactions

  1. 01We may fail to realize all of the anticipated benefits of the Recapitalization Transactions, or those benefits may be short-lived or insufficient for our future needsNew
  2. 02Failure to manage our Board transition and related changes could materially adversely affect our businessNew

Risks Related to Our Business and Industry

  1. 03If we are unable to drive future growth or manage our growth effectively, our brand, Company culture, and financial performance may suffer 35% rewritten
  2. 04The global fashion industry is highly competitive and rapidly changing, and we may not be able to compete effectivelyNew
  3. 05We rely on consumer discretionary spending and have been, and may in the future be, adversely affected by economic downturns and other macroeconomic conditions or trends 49% rewritten
  4. 06A high proportion of our revenue comes from longer-tenured subscribers. A decrease in the number of customers, their tenures with us, and/or a reduction in the amount customers spend on our offerings could negatively affect our operating results31% rewritten
  5. 07We have a history of losses, and we may be unable to achieve or sustain profitability 40% rewritten
  6. 08If we fail to anticipate and respond successfully to new and changing fashion trends and consumer preferences and accurately forecast consumer demand, our business could be harmed
  7. 09Shipping and logistics are a critical part of our business and our supply chain and any changes or interruptions in shipping or logistics operations could adversely affect our operating results
  8. 10If we are unable to acquire and manage our products effectively and plan for future expenses, our operating results could be adversely affected
  9. 11If we fail to maintain and enhance our brand, our ability to attract and retain customers will be impaired and our business, financial condition, and results of operations may suffer 57% rewritten
  10. 12Our partners and customers may not be satisfied with our technological or other platform enhancements or new offerings or may perceive that these offerings do not respond to their needs or create value for them. Our customers may also be dissatisfied with the product mix we currently offer or will offer in the future34% rewritten
  11. 13Our use of AI may subject us to new or heightened legal, regulatory, ethical, operational or other challengesNew
  12. 14We rely heavily on the effective operation of our proprietary technology systems and software, as well as those of our third-party vendors and service providers, for our business to effectively operate and to safeguard confidential information
  13. 15Any significant technology disruption or failure, cyberattack or data security incident could adversely affect our business, financial condition and operations 21% rewritten
  14. 16Our e-commerce business faces distinct risks, such as fulfillment of orders, and our failure to successfully manage these risks could have a negative impact on our profitability
  15. 17Our quarterly and annual results of operations may fluctuate, which may make it difficult to predict our future performance
  16. 18We face risks arising from cost-cutting and restructuring of our operations, which could adversely affect our financial condition, results of operations, cash flows, or business reputation36% rewritten
  17. 19We rely on the experience and expertise of our Co-Founder and Chief Executive Officer, senior management team, key technical and strategic employees and hourly personnel27% rewritten
  18. 20We believe that our Company culture has contributed to our success and if we cannot maintain this culture as we grow, our business could be harmed24% rewritten
  19. 21Material changes in the pricing practices of our brand and manufacturing partners and/or the costs of raw materials could negatively impact our profitability41% rewritten
  20. 22Our business is affected by seasonality47% rewritten
  21. 23We may require additional capital to support the growth of our business and satisfy our debt obligations, and this capital might not be available on acceptable terms, if at all52% rewritten
  22. 24Our level of indebtedness could have a material adverse effect on our ability to generate sufficient cash to fulfill our obligations under such indebtedness, to react to changes in our business and to incur additional indebtedness to fund future needs71% rewritten
  23. 25Our New Credit Agreement contains covenants and other restrictions on our actions that may limit our operational flexibility or otherwise adversely affect our business, financial condition and results of operations38% rewritten
  24. 26We did not design and maintain effective controls to ensure (i) the appropriate segregation of duties in the operation of manual controls and (ii) journal entries were reviewed at the appropriate level of precision25% rewritten
  25. 27The requirements of being a public company may strain our resources, divert management’s attention, and affect our ability to attract and retain executive management and qualified board members
  26. 28Strategic investments, partnerships, alliances, or acquisitions could be difficult to identify, pose integration challenges, divert the attention of management, disrupt our business, dilute stockholder value, and adversely affect our business, financial condition, and results of operations
  27. 29Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States
  28. 30If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our results of operations could be adversely affected
  29. 31Scrutiny and evolving expectations from consumers, investors, regulators, policymakers, employees and other stakeholders regarding environmental, social and governance matters may adversely impact our business and reputation
  30. 32The estimates of market opportunity and forecasts of market growth included in our public disclosures may prove to be inaccurate, and even if the markets in which we compete achieve the forecasted growth, our business could fail to grow at similar rates, or at all
  31. 33The COVID-19 pandemic had a material adverse impact on our business . Other future pandemics or public health crises may have a similar adverse impact on our business
  32. 34Expansion of our operations internationally requires management attention and resources, involves additional risks, and may be unsuccessful

Risks Related to Our Legal and Regulatory Environment

  1. 35From time to time, we may be subject to claims, legal proceedings, regulatory disputes, and governmental inquiries that could cause us to incur significant expenses, divert our management’s attention, and materially harm our business, financial condition, and operating results
  2. 36Failure to adequately obtain, maintain, protect and enforce our intellectual property and proprietary rights could harm our brand, devalue our proprietary content, and adversely affect our ability to compete effectively 38% rewritten
  3. 37We may incur costs to defend against, face liability or be vulnerable to intellectual property infringement, misappropriation, and other claims and allegations brought against us by others, which could result in substantial damages and diversion of management’s efforts and attention 54% rewritten
  4. 38Our use of third-party open-source software could adversely affect our ability to offer our products and offerings and subjects us to possible litigation 25% rewritten
  5. 39We could incur significant liabilities related to, and significant costs in complying with, environmental, health and safety laws and regulations 30% rewritten
  6. 40Our ability to utilize our net operating loss carryforwards and certain other tax attributes to offset taxable income or taxes may be limited 82% rewritten
  7. 41Changes in our effective tax rate or tax liability may have an adverse effect on our results of operations

Risks Related to Our Dependence on Third Parties

  1. 42We face risks associated with brand and manufacturing partners from whom our products are sourced or co-manufactured
  2. 43We rely on third parties to provide the payment processing infrastructure underlying our business. If these third-party providers become unavailable or unavailable on favorable terms, our business could be adversely affected
  3. 44Our business relies on third-party cloud infrastructures, and any disruption of, or interference with, our use of cloud infrastructures could adversely affect our business, financial condition or results of operations
  4. 45Any failure by us, our brand partners, third-party manufacturers, or marketing partners to comply with our vendor code of conduct, product safety, labor, or other laws, or to provide safe factory conditions for their workers, may damage our reputation and brand, and harm our business
  5. 46We may incur significant losses from fraud
  6. 47If our insurance coverage is insufficient for the needs of our business or our insurance providers are unable to meet their obligations, we may not be able to mitigate the risks facing our business

Risks Related to Ownership of Our Class A Common Stock

  1. 48We are currently noncompliant with Nasdaq Listing Rule 5605(c)(2)(A), which requires listed companies to have at least three audit committee membersNew
  2. 49On October 28, 2025, we notified Nasdaq of our non-compliance with Nasdaq Listing Rule 5605(c)(2)(A), which requires that the Audit Committee be comprised of three independent directors, and our intent to rely on the cure period provided by Nasdaq Listing Rule 5605(c)(4)(B)New
  3. 50We are an “emerging growth company” and a “smaller reporting company,” and we cannot be certain if the reduced reporting and disclosure requirements applicable to emerging growth companies and smaller reporting companies will make our Class A common stock less attractive to investors21% rewritten
  4. 51Our share price may be volatile, and our investors may be unable to sell shares at or above the price they paid for them
  5. 52Our management has broad discretion in the use of our cash resources and may not use them effectively
  6. 53Our business and financial performance may differ from any projections that we disclose or any information that may be attributed to us by third parties
  7. 54See Risks Related to the Recapitalization Transactions and “ Note 4 — Recapitalization Transactions ” in the Notes to the Consolidated Financial Statements for more information on the Recapitalization Transactions, including the sale and issuance of our common stockNew
  8. 55These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of Class A common stock or other securitiesNew
  9. 56Certain provisions in our corporate charter documents and under Delaware law may prevent or hinder attempts by our stockholders to change our management or to acquire a controlling interest in us, and the trading price of our Class A common stock may be lower as a result
  10. 57Our Amended Charter provides that the doctrine of “corporate opportunity” does not apply with respect to any directors (or their affiliates) who are not our employees
  11. 58The effects of climate change and related regulatory, customer and investor responses may adversely impact our business

Other Rent the Runway 10-Ks

  • FY2025 10-K risk factors
    54 risks

    Rent the Runway faces severe profitability challenges with $1,123.0 million in accumulated deficit and $333.7 million in debt under the Temasek Facility. The business depends heavily on repeat subscribers, third-party logistics, and brand partners for its fashion rental inventory. Internal controls and IT systems have deficiencies that threaten accurate financial reporting and platform operations.

    Filed Apr 15, 2025

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.