Stitch Fix shares crater as retailer swings to loss, cuts full-year forecast

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  • Stitch Fix posted a lower-than-expected loss in the fiscal first quarter and beat analysts’ sales expectations.
  • Sales were driven by more users thanks to its freestyle direct-buy option.
  • But the company cut its revenue outlook for the fiscal year, saying it faces ongoing supply chain pressures and is in a transition period as it brings in new users.

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Stitch Fix on Tuesday reported a lower-than-expected loss for its fiscal first quarter and beat analysts’ sales expectations, thanks to the addition of more users of its freestyle direct-buying service.

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But the online shopping and styling service cut its revenue outlook for the fiscal year, saying it faces ongoing supply chain pressures and is in a transition period as it brings in new users.

Its shares fell more than 21% in after-hours trading on the news.

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“We are in this huge learning phase of engaging new customers for the Freestyle and Fix experience,” CEO Elizabeth Spaulding said in a phone interview. “And that’s the broader supply chain background. … We wanted to make sure we were reasonably conservative for the year.”

Here’s how Stitch Fix fared for the three-month period ended October 30, compared to analysts’ expectations, based on survey data compiled by Refinitiv:

  • Loss per share: 2 cents versus 14 cents expected loss
  • Revenue: $581 million versus $571 million expected

Stitch Fix reported a net loss of $1.83 million, or 2 cents per share, compared to net income of $9.54 million, or 9 cents per share, a year ago. That was ahead of analysts’ estimates of a loss per share of 14 cents.

Sales rose 19% to $581 million from $490 million a year ago. It beat expectations of $571 million.

Stitch Fix said active subscribers increased 11% from a year ago to 4.18 million. However, according to StreetAccount, this was lower than analysts’ estimated 4.23 million active customers. The Company defines Active Customers as those who have either ordered a Fix subscription or purchased an item directly from its website in the past 52 weeks from the last day of the quarter.

The company said net revenue per active customer rose 12% to a record $524. Spaulding attributed the increase to more customers purchasing additional items of clothing, in addition to their membership. The company completed rolling out the Freestyle to the public in the fourth quarter. Earlier, only Stitch Fix customers could access the service.

“It’s early days. … We’re just opening up to that new customer experience, but we’re in the game,” Spaulding said. “It’s now opening up the ecosystem … and it’s going to be a multi-quarter change as a whole. But we’re deeply committed to that building phase.”

For its fiscal second quarter, Stitch Fix sees sales of between $505 million and $520 million. Analysts were looking for $585 million in sales.

For the fiscal year, it now forecasts revenue to grow at a high-single-digit rate, below its prior outlook of 15% or more growth. Analysts were looking for 15.7% growth in sales year over year.

Shares of Stitch Fix are down about 57% so far. The company’s market cap is $2.7 billion.

Get the full earnings press release from Stitch Fix Here,

This story is developing. Please check back for updates.

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