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Stitch Correction (SFIX) First Quarter 2022 Revenue Beat

The Stitch Fix logo for smartphones located in Hastings-on-Hudson, NY, USA on Saturday, June 5, 2021. StitchFix Inc. Will release earnings on June 7th.

Tiffany Hagler-Geard / | Bloomberg | Getty Images

Stitch correction Shares fell 18% in an extended deal on Tuesday after online shopping and styling companies lowered their earnings outlook because of supply chain issues and the need to educate consumers about freestyle options.

The number of active customers using the service is lower than expected, suggesting that demand is slowing. A recent promotional offer brought a wave of new customers who temporarily joined Stitch Fix but didn’t stick to it, he said.

Stitch Fix reported a narrower loss than expected in the first quarter as sales exceeded analysts’ expectations, but investors who were expecting a direct purchase option, Freestyle, would provide greater boost. It wasn’t enough to please that.

“We are in this big learning stage of onboarding new clients to the Freestyle and Fix experiences,” CEO Elizabeth Spaulding said in a telephone interview. “And there is a background to this broad supply chain …. We wanted to make sure it was properly conservative that year.”

Based on the survey data compiled by Refinitiv, here’s how the Stitch Fix took place in the three months to October 30, compared to what analysts expected.

  • Loss per share: 2 cents vs. expected 14 cents loss
  • Revenue: $ 581 Million vs. $ 571 Million Expected

Stitch Fix reported a net loss of $ 1.83 million, or 2 cents per share, while a previous year’s net income was $ 9.54 million, or 9 cents per share. This exceeded analysts’ estimates of a loss per share of 14 cents.

Revenue increased 19% from $ 490 million in the previous year to $ 581 million. That exceeded expectations of $ 571 million.

According to Stitch Fix, the number of active clients has increased by 11% from a year ago to 4.18 million. However, according to the Street Account, this was less than the estimated 4.23 million people by active client analysts. The company defines active clients as those who ordered from a traditional Fix subscription or purchased items directly from the website in the last 52 weeks from the last day of the quarter.

According to the company, net revenue per active client increased by 12% to a record $ 524. In addition to subscriptions, Spaulding has grown with more customers buying additional clothing. The company completed the freestyle open house in the fourth quarter. Prior to that, only StitchFix subscribers could use the service.

“It’s still in its infancy …. We’re pioneering that new customer experience, but we’re in the game,” said Spaulding. “This is now opening up the ecosystem … and it will definitely be a multi-quarter transformation, but we are deeply committed to its building phase.”

The company also said it added more than 20 brands to the platform during the quarter, including Adidas and Van, to increase the styles customers can choose from.

Outlook is disappointed

Stitchfix investors are already in a tough year, with stocks up about 57% to date at the closing market on Tuesday.

And Stitch Fix can still be a daunting task, as it hasn’t yet proved to Wall Street that consumers are choosing freestyle options over department store chains or buying directly from brands. There is sex. Under Spaulding, the company is moving its focus to more online fashion marketplaces rather than subscription styling services.

In addition, we are addressing industry-wide supply chain complications where some inventory orders are stagnant and apparel category inventory is scarce. According to the company, delays range from one to four weeks.

Chief Financial Officer Dan Jeda said it is likely that it will take several quarters for the company’s efforts to pay off.

Second-quarter sales of Stitch Fix range from $ 505 million to $ 520 million. Analysts were looking for $ 585 million in sales.

This year, we expect profit growth in the high single digits from the previous outlook of growth of 15% or more. Analysts expected sales to increase by 15.7% year-on-year.

According to Spaulding, the company is in the early stages of figuring out which marketing channels it will use to attract potential customers, such as social media influencers. Following the new advertising campaign from September to October, the CEO said he was “carefully optimistic” about the feedback.

But “it’s still a bit premature,” Spaulding said.

StitchFix has a market capitalization of $ 2.7 billion.

Find a complete earnings press release from StitchFix here..

Stitch Correction (SFIX) First Quarter 2022 Revenue Beat

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