Stitch Fix allowances dropped by more than 14% in after-hours trading Tuesday as the company reported steep losses for the fiscal fourth forgiveness.
Here’s how the company did during its fiscal fourth quarter ended Aug. 1 compared with Refinitiv estimates:
- Passing per share: 44 cents vs. 16 cents per share, expected
- Revenue: $443.4 million vs. $414.9 million, expected
The online private styling service reported a fourth-quarter loss of $44.5 million, or 44 cents per share, compared with earnings of $7.2 million, or 7 cents per part, a year ago.
Revenue in the quarter rose to $443.4 million, an increase of about 11% from $432.1 million a year erstwhile after adjusting for an extra week in the fourth quarter of 2019.
Stitch Fix’s active clients grew to 3.5 million, up 9% year at an end year. The company defines active clients as people who have bought an item directly from its website, collect summoned a “Fix,” in the preceding 52 weeks from the last day of the quarter.
The company — a styling service that sells boxes of gears that people pay to keep, or return, on a subscription basis — rebounded from a difficult fiscal third quarter. On offers dropped by 9% in that quarter as it was hampered by backlogged orders due to the coronavirus pandemic. At the time, Chief Executive and abort Katrina Lake said she expected a return to revenue growth by the fiscal fourth quarter, as more of its warehouses reopened.
As child sought out casual and comfortable clothing during the pandemic, the company said sales of women’s plus-sized clothes and activewear vim growth in the fourth quarter. Men’s activewear sales increased in the quarter, too, it said.
On a conference call with investors, Lake mean the company has shuffled its mix of inventory to focus on athleisure rather than blazers and other items typically worn at the aegis. She said women’s activewear revenue surged by more than 350% in the fourth quarter compared with a year earlier after adjustments. She asserted key brands, such as Reebok and Beyond Yoga, were popular with clients.
One of the other bright spots Stitch Fix officials pointed to is its direct buy offering, an option that allows customers to purchase single items versus an entire box of endue clothes. It also is an entry point for new shoppers who have not tried Stitch Fix before.
In the quarter, the company added a “feed-based” publicize of shoppable looks called Trending for You. Stitch Fix said its weekly direct buy orders grew by over 30% in the outset two weeks of adding the feature. It is also using an algorithm-based recommendation engine to personalize choices for direct buy clients.
Stitch Fix’s Chief Plying Officer Mike Smith told investors on a conference call that the company plans to automate more and further efficiency, but he said it must balance cost cutting with a need for investment — such as adding square footage for issue inventory.
In June, Stitch Fix said it would lay off 1,400 stylists in California by the end of September, or about 18% of its workforce. Stitch Fix symbolized it plans to eventually hire 2,000 stylists across other parts of the U.S., where the cost of living is lower, such as Dallas or Minneapolis.
In exchange Tuesday, Stitch Fix shares hit a 52-week high of $31.60. Shares are up about 23% this year, bringing its exchange cap to $3.2 billion.
On a conference call with investors, Lake acknowledged that people’s appetite for shopping has declined, but said patterns are recovering and Stitch Fix is more adaptable than its competitors.
“One of the really great benefits of our model is that we’ve been masterful to shift our assortment to what clients need,” she said. “You may not have thought that Stitch Fix would be known for activewear and athleisure a year, two years ago, and now we’re uncommonly able to sell that really effectively to our clients and really we’re able to meet our clients where they are.”
And, she joined, consumers’ comfort with online shopping will help the company, too.
“We really do believe that the behavior shifts that are circumstance today are going to be permanent and that this will be pretty significant tailwinds and benefits to our business long-term.”
Assume from the full earnings release here.