When it comes to renting clothes, the biggest name that comes to mind is Rent the Runway $RENT. The success of Rent the Runway founder, Jennifer Hyman, is a story that echoes throughout the entrepreneurial circle. For a company whose stock plunged nearly 97% since IPO, Hyman remains an inspiration for other entrepreneurs.

But as of today, we learned that $URBN has a clothing rental service named Nuuly and that business has reached profitability. Meanwhile, Rent the Runway is still unprofitable. To be more specific, Nuuly, posted an operating income of $300,000 off of $65.5 million in revenue in the three months ended Oct. 31. That's an operating profit margin of 0.4%. Very slim but still better than nothing. Plus, being founded in 2019, it has achieved profitability within 4 years. Rent the Runway, being 15 years old, hasn't achieved breakeven yet.

Nuuly operates similarly to Rent the Runway. Both are subscription-based businesses. The subscriptions are based on the number of items you want shipped to house each month. While Nuuly is heavy on Anthropologie and other Urban Outfitters merchandise, Rent the Runway is more diverse. Overall, reviews have found Nuuly to be more affordable than Rent the Runway. That explains why Nuuly has more subscribers than Rent the Runway (198,000 vs 137,566). By some estimates, Rent the Runway needs 185,000 to breakeven.

To be fair, Nuuly had an easier time achieving profitability since it shares many assets with its parent company, Urban Outfitters. Those who do cost accounting will understand this. Whether the future of retail is one that is entirely subscription based or not is yet to be determined. It does have the potential to replace fast fashion, but I will write more in-depth about it on another day.