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Stitch Fix shares rise as online styling service reports surprise profit

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The Stitch Fix app for download from the Apple App Store on a smartphone disposed in Hastings-on-Hudson, New York, United States on Saturday, June 5, 2021. Stitch Fix Inc. is expected to publish earnings on June 7 .

Tiffany Hagler Gear | Bloomberg | Getty Images

Stitch Fix shares jumped more than 17% in extended trading on Tuesday after the online shopping and styling service reported surprise earnings for its fiscal fourth quarter.

Sales for the three-month period ended July 31 also exceeded analysts’ expectations, thanks to disproportionate growth in its women and children categories.

Consumers have been splurging on new outfits in recent months as many return to school and return to social gatherings. Some also spoke of the need for new clothes after gaining or losing weight during the pandemic.

Here’s how Stitch Fix fared compared to what Wall Street expected, based on an analyst poll conducted by Refinitiv:

  • Earnings per share: 19 cents vs. expected loss of 13 cents
  • Revenue: $ 571.2 million vs. $ 548 million expected

Net income attributable to shareholders was $ 28 million, or 19 cents per share, in the most recent period. A year ago, it was posting a net loss of $ 44.5 million, or 44 cents per share. Analysts were expecting the company to post a loss of 13 cents per share.

Revenue reached $ 571.2 million from $ 443.4 million a year earlier. It was better than analysts’ expectations for $ 548 million.

Stitch Fix reported nearly 4.2 million active customers, up 18% from the previous year. The company said net income per active customer was $ 505, breaking the $ 500 threshold for the first time.

Stitch Fix defines active customers as individuals who have either ordered a “Fix” subscription or purchased an item directly from its website within the 52 weeks preceding the last day of the quarter.

Last month, Stitch Fix finally opened up its direct buy option, now known as “Freestyle”, to the public. This allows people to purchase Stitch Fix for individual garments, without the need for a subscription.

CEO Elizabeth Spaulding said this should help Stitch Fix grow its addressable market over the coming year.

For its first fiscal quarter, Stitch Fix said it expects sales of between $ 560 million and $ 575 million. That’s below analysts’ expectations for $ 588 million.

For the next fiscal year, Stitch Fix forecasts a sales increase of 15% or more over the previous year. Analysts polled by Refinitiv were looking for an 18% increase.

As the market closed on Tuesday, Stitch Fix shares have fallen nearly 39% this year. The company has a market capitalization of $ 3.8 billion.

Find the full Stitch Fix press release here.

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