May 20, 2022

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Stitch Fix shares fell after the company cut guidance for this year

Stitch Fix shares fell after the company cut guidance for this year

The Stitch Fix app for download in the Apple App Store on a smartphone arranged in Hastings-on-Hudson, New York, United States, on Saturday, June 5, 2021. Stitch Fix Inc. is scheduled to release. Earnings on June 7.

Tiffany Hagler Gerd | Bloomberg | Getty Images

stitch repair Shares tumbled in extended trading Tuesday after the online design service projected a weak outlook for its fiscal third quarter and lowered its full-year outlook, as it struggles to grow its subscriber base.

In its most recent quarter, the company said it faced challenges in absorbing new customers and converting customers. Stitch Fix reported a loss per share in line with analyst estimates, and revenue slightly above expectations, for the three months ended Jan. 29.

Looking ahead, however, Stitch Fix is ​​more cautious about future growth prospects. CEO Elizabeth Spaulding said the company’s number of active clients isn’t where it’d like it to be. This is despite the option recently offered to shoppers to purchase individual items from their website, without a subscription, Known as Freestyle.

Shares of Stitch Fix are down more than 17% in extended trading.

Here’s how the retailer fared in the fiscal second quarter compared to what Wall Street had been expecting, based on a survey of analysts by Refinitiv:

  • share loss: 28 cents vs. 28 cents expected
  • Revenues: $516.7 million vs. $514.8 million forecast

Stitch Fix posted a net loss of $30.9 million, or 28 cents a share, compared to a loss of $21 million, or 20 cents a share, the previous year. This was well in line with analyst estimates for the quarter.

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Revenue grew to $516.7 million from $504.1 million in the previous year, topping estimates of $514.8 million.

The company had just over 4 million active customers, an increase of 4% over the same period last year. Revenue per customer was $549 during this period.

Stitch Fix defines an active customer as a customer who has either checked out a structured style box, called a Fix, or ordered an item using the retailer’s direct purchase option in the previous 52 weeks, measured on the last day of that period.

In the third quarter, Stitch Fix expects net revenue to be between $485 million and $500 million, which is a decrease of 10% to 7% from the previous year. Analysts were looking at sales of $560.5 million.

For the fiscal year ending July 30, Stitch Fix sees revenue flat to slightly lower year-over-year, assuming the number of active customers is constant through the end of the 12-month period. Analysts expected revenue to rise 8.1% for the year.

The company said it is actively evaluating its marketing spend to better manage in-flight and conversion improvements. As a result, it said it has withdrawn its previously provided forecast for full-year adjusted earnings before interest, taxes and amortization.

Find the full press release from Stitch Fix here.

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