Text size
Stitch Fix said the holidays were softer than expected.
Kindness Stitch Fix
Stitch Fix shares suddenly traded lower at the end of the trading month, after the subscription-based clothing retailer posted disappointing results for the second fiscal quarter and lowered its guidelines for the next fiscal year, which begins in July.
Shares fell 23% to $ 53.14.
For the quarter ended Jan. 31, Stitch Fix (ticker: SFIX) reported revenue of $ 504.1 million, up 12% from last year, but outside the guidance range of $ 506 million to $ 515 million. of dollars. The company recorded an adjusted Ebitda loss – earnings before interest, taxes, amortization and amortization – of $ 8.9 million, higher than the target range of a loss between $ 3 and $ 6 million. It lost 20 cents a share in the quarter, two cents better than the street’s consensus forecast of a 22-cent loss.
Stitch Fix said it had 3.9 million active customers at the end of the quarter, up 12% from a year earlier. The average revenue per active customer was 467 USD, down 7% from a year ago.
For the third fiscal quarter, Stitch Fix has revenue of $ 505 million to $ 515 million, under the previous street consensus, of $ 523 million. For the full year, the company now sees revenue of $ 2.02 billion to $ 2.05 billion, down from previous forecasts of $ 2.05 billion to $ 2.14 billion.
Stitch Fix blamed the quarterly revenue shortfall on delivery issues. “Due to the pandemic, carriers experienced an unprecedented volume during the holidays and we saw increased cycle times,” the company said in a letter to shareholders. the corrections we delivered in that quarter. “The company said that, adjusted for this factor, the revenues would have been in the field of guidance.
Stitch Fix said it was “taking steps to diversify our outbound transportation mix and working with our main carrier, the United States Postal Service, to process our returns more efficiently.”
Stitch Fix also said its direct purchase option helped the company in January display “the strongest monthly revenue growth of any January.” But the company also said it saw “poorer holiday performance than I anticipated,” with people switching from car shopping to gifts.
In terms of guidance, Stitch Fix said that “it sees strong trends in the acquisition of new customers, healthy levels of vehicle retention and increases customer involvement with direct purchase.” But the company also said that “longer cycle periods … persisted in February” and could have an impact on revenue in the second half.
“These longer cycle periods, which consist mainly of operator and customer delays, have an impact on revenue recognition during that period and may delay subsequent Fixed orders, given that a large majority of our customers receive recurring fixed shipments.” , said the company. “In addition, there is still a lot of uncertainty given Covid, and as a result, we are taking a more measured approach to our prospects.”
The company also said that the launch of the direct purchase option to new customers will not take place until near the end of this fiscal year. “Our product teams have focused on expanding user experience features to ensure that direct purchase is a great experience from the start to new customers at Stitch Fix,” the company said. “As such, we intend to continue testing the product throughout the 3rd quarter and fourth quarter before launching the product on a large scale in the fourth quarter. This launch schedule also plays a role in our revised guide. ”
In an interview with Barron’sStitch Fix President Elizabeth Spaulding said the company remains confident in its business model and opportunity – it believes 50% of the clothing market will change online by 2025.
But she also acknowledges that the company’s plan to offer new customers the direct purchase model has been eliminated in relation to previous domestic expectations, citing the complexity of the project. “We want to make sure we understand her well,” she said.
On the issue of transportation, Spaulding notes that the company has seen cycle periods – the period from product delivery to customers to company return for unwanted items – increasing “in double-digit figures” in percentage terms, a change largely related to delays by the operator, although the company also recorded longer waiting times for consumers before making returns. She also notes that the February cycle was affected by bad weather, particularly affecting distribution centers in Dallas and Indianapolis.
Write to Eric J. Savitz at [email protected]