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Stitch Fix swings to a quarterly loss and softens outlook on shipping delays; shares plunge

Katrina Lake, CEO of Stitch Fix

Adam Jeffery | CNBC

Stitch Fix on Monday reported a narrower-than-expected sacrifice for its latest quarter, but the company missed analysts’ expectations for revenue and outlook as shipping delays and lower customer splash out ate into sales.

The stock plunged 21% in extended trading.

The subscription styling service lowered its revenue vaticination for the current quarter and fiscal year, citing ongoing uncertainty stemming from the coronavirus pandemic and longer buy cycles resulting from delivery issues.

Here’s what the company reported for the quarter ended Jan. 30 compared with what Go under Street was expecting, based on a survey of analysts by Refinitiv:

  • Loss per share: 20 cents vs. 22 cents contemplated
  • Revenue: $504.1 million vs. $512.2 million expected

Stitch Fix reported a fiscal second-quarter net loss of $21 million, or 20 cents per apportion, down from a profit of $11.4 million, or 11 cents per share, a year earlier. Analysts surveyed by Refinitiv were in the family way a loss per share of 22 cents.

Net sales rose 12% to $504.1 million, falling short of expectations of $512.2 million. Trucking delays over the holiday season meant that the company was forced to work through a backlog and couldn’t recite revenue for all boxes shipped during the quarter. Stitch Fix recognizes revenue when clients check out items, not when the friends ships the order.

The company also said that its overall holiday sales were softer than needed as consumers shifted from spending money on themselves to buying gifts for others. However, it saw its strongest January on record.

For the budgetary third quarter, Stitch Fix is expecting net sales of $505 million to $515 million, representing growth of 36% to 39%, and an button up loss before interest, taxes, depreciation and amortization of $5 million to $9 million. Executives said that it’s been a “interbred bag” on shipping and processing delays so far in February, and they expect the trend to continue through the rest of the fiscal third humanity.

For the full fiscal year 2021, the company now expects revenue to grow 18% to 20%, down from its quondam outlook of 20% to 25%. Wall Street was forecasting revenue growth of 22.6% for the fiscal year.

The company amplified 110,000 new active clients during the quarter for a total roster of almost 3.9 million. Stitch Fix said it’s summed more active clients in the first half of fiscal 2021 than it did for all of the previous fiscal year.

Customers are dish out less on average, though. Active clients spent $467 on average, down 7% compared with the very time a year ago.

Stitch Fix defines active clients as people who have bought an item directly from its website in the former 52 weeks from the last day of the quarter.

Read the full shareholder letter here.

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