This fashion rental company just hit numbers the industry didn’t see coming.
Nuuly, Urban Outfitters’ innovative clothing rental subscription service, is making headlines with record-breaking financial performance and strategic expansions that are reshaping the fashion rental landscape. The latest developments show how the company has evolved from a start-up concept into a profitable market leader, setting new standards for sustainable fashion consumption.
Record-Breaking Financial Performance
URBN’s latest quarterly results reveal Nuuly’s exceptional growth trajectory. According to the company’s Q1 2025 financial report, “Subscription segment net sales increased by 59.5% primarily driven by a 52.9% increase in average active subscribers in the current quarter versus the prior year quarter,” said URBN.
This growth shows the platform’s expanding appeal among fashion-conscious consumers seeking sustainable alternatives to traditional retail.
The subscription service has achieved what many in the industry thought impossible—consistent profitability in the notoriously challenging rental fashion space.
As reported in late 2023, “Urban Outfitters’ clothing rental service, Nuuly, has turned its first profit,” the company said, marking a significant milestone that positioned the company ahead of competitors like Rent the Runway.
Strategic Evolution: The Thrift Shop Initiative
One of Nuuly’s most intriguing recent developments is the launch of its new Thrift Shop, which represents a strategic pivot from its earlier peer-to-peer marketplace model.
Kim Gallagher, Executive Director of Marketing and Customer Success at Nuuly, discussed the launch and strategy behind Nuuly Thrift, explaining that during the pandemic, “We immediately pivoted all our engineering and product resources to focus on that, and that’s how we were able to get Nuuly Thrift live this year.”
She also highlighted the appeal of thrift for younger customers, stating, “People love in-store thrift experiences… even more so with younger customers. So I actually think it’s a great opportunity,” said Gallagher.
The new Thrift Shop is different from the previous resale attempt. As detailed in recent reports, “Nuuly’s new Thrift Shop is similar in name but different in structure from Nuuly Thrift, a peer-to-peer marketplace it rolled out in 2021. Nuuly Thrift, which was quietly shuttered earlier this year, operated as its own app in which shoppers could buy and sell gently-used apparel and accessories belonging to any brand. The new Thrift Shop is limited to Nuuly’s inventory only, and it does not function as a peer-to-peer model.” The Thrift Shop offers significant discounts, with pieces discounted in the double digits, often 50% to 70%, making high-quality fashion more accessible.
Technology-Driven Growth and Sustainability
Nuuly’s success comes largely from its sophisticated technological infrastructure. Chirag Dadia, Director of Engineering at Nuuly, noted: “We truly think of Confluent Cloud and Kafka as the central nervous system of our business, spanning everything from the customer-facing applications to distribution center operations from a technology perspective, said Dadia.
The company’s commitment to sustainability goes beyond just reducing clothing waste. Jack Delaney, Senior Manager of Analytics at Nuuly, described the company’s unique approach: “For some companies, it’s a problem when 1% of orders result in a return. For us, it’s 100% of orders that result in a return. And finding ways to make that work is fascinating.” He also explained that Nuuly’s team can “gather information about the durability and longevity of garments,” providing unique data to the fashion industry, said Delaney.
Expanding Infrastructure and Market Reach
To support rapid growth, Nuuly has invested in infrastructure. The company recently began operations at its new fulfillment center in Raymore, Missouri, expected to triple its active subscriber base. This expansion represents a substantial commitment, with URBN set to invest $60 million in the facility over five years.
“Nuuly has experienced unprecedented growth and momentum, and we are excited to expand our operations to the Kansas City region to support our next phase of growth,” said David Hayne, Chief Technology Officer of URBN and President of Nuuly. “Opening our second U.S. fulfillment center will allow us to grow well into the future,” said Hayne.
Strategic Partnerships and Future Innovation
Nuuly’s continued evolution is supported by strategic partnerships that enhance its technological capabilities. The recent announcement of an “expanded partnership” with Recurly demonstrates the company’s focus on customer experience innovation.
This collaboration enables Nuuly to “enhance customer experience and bolster its offerings, while maintaining a focus on convenience, personalization, and sustainability,” as reported in the partnership announcement.
“Our platform enables smooth subscription and billing management, freeing up Nuuly’s team to focus on designing innovative features and curating memorable experiences for its customers at every touch point. Together, we’ve helped Nuuly lay the groundwork for dynamic, scalable growth while simultaneously enhancing their customer experience,” said Joe Rohrlich, CEO at Recurly.
Looking Forward
Nuuly’s journey from start-up to industry leader shows the potential for sustainable business models in fashion. With over 200,000 active subscribers and continued investment in technology and infrastructure, the company is well-positioned to maintain its growth trajectory while expanding the reach of sustainable fashion consumption. The success of initiatives like the Thrift Shop and continued technological innovation suggest that Nuuly will remain at the forefront of fashion rental evolution, proving that profitability and sustainability can go hand in hand.
