Stitch Fix stock tumbles after posting lower-than-expected loss

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fell after hours on Tuesday, even as the online personal shopping experience-based website reported a smaller-than-expected loss for its fiscal first quarter and beat analysts’ sell expectations thanks to an increase in its Freestyle service which allows customers to make their purchases directly on the site.


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(ticker: DG), whose shares fell nearly 20% to $ 19.78 after the announcement, posted a tax loss of 2 cents per share in the third quarter, lower than the 14-cent loss estimated by the analysts.

“We are currently in a major learning phase as we develop our new Freestyle experience,” CEO Elizabeth Spaulding said during a call with investors on Tuesday evening.

Revenue reached $ 581 million, up 19% from a year ago, surpassing the $ 571 million expected by Wall Street.

Active users increased 11% to 4.18 million from a year ago. That was even less than the 4.23 million analysts of active customers projected, according to FactSet.

Stitch Fix also slashed its revenue outlook for the year, saying it is in a period of transition to attract new users amid supply chain crises.

“Supply chain issues are expected to ease over the coming year. . . We’re learning a lot right now, ”said Spaulding. “We are confident that we will improve in the coming quarters. “

Investors on the call were not as convinced, however, and raised concerns that Freestyle’s sales growth and market share for the company could trump other products than it offers.

Spaulding says she sees an opportunity to navigate the demand for various products and services.

“We plan to drive more traffic to the site through stitchfix.com via product detail pages and new channels,” she said. “In the short term, people compromise between ‘do I want to try Fix, do I want to try Freestyle?’ , and so this is the learning phase that we are in right now and we see the opportunity to improve ourselves.

Stitch Fix ships clothing and accessories selected by a stylist to customers based on the information provided, and the items can be purchased or returned. With Stitch Freestyle, customers can instantly purchase items that have been selected for them.

Stitch Fix forecasts revenue growth at a high single-digit rate, down from its previous growth outlook of 15% or more. This compares to the 15.7% year-over-year growth analysts were expecting.

After markets closed on Wednesday, Stitch Fix shares have fallen 57% so far in 2021.

Write to Logan Moore at logan.moore@barrons.com


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