Stitch Fix Surges on Sales Beat, Repeating Familiar Pattern
Stitch Fix Is Making Double-Digit Earnings Moves Look Routine
(Bloomberg) -- Stitch Fix Inc. gained as much as 27% on Thursday after reporting sales that beat the highest analyst estimate. Again.
Big stock moves are nothing new for investors who have seen the shares of the clothing-subscription service rise or fall at least 20% the day after each of the past four earnings reports. And the gains usually don’t last. After Thursday’s pop, the stock was trading at just the highest since March 19.
Stitch Fix had net revenue of $408.9 million in the fiscal third quarter, topping the highest analyst estimate at $398 million and prompting Stitch Fix to boost its annual revenue forecast. Active customers, a closely watched metric, rose to 3.1 million in the quarter, an increase of 17% year-over-year, the San Francisco-based company said.
Net revenue per client rose 7.7%, its fourth straight quarter of growth, as the company’s algorithms targeted higher-quality customers and recommended highly personalized assortments to them, KeyBanc analyst Edward Yruma said.
“Amid one of the worst apparel earnings seasons in recent memory, Stitch Fix posted gross margin expansion,” helped by fewer clearance discounts, Yruma wrote in a note reaffirming his overweight rating. “Additionally, Stitch Fix is driving improvement to men’s gross margins, which are tracking comparable to women’s at a similar stage of development.”
RBC analyst Mark Mahaney was impressed by the consistency of Stitch Fix’s revenue growth.
”We see substantial growth opportunities for a company that continues to offer a differentiated product/service and has successfully scaled its business over the last six years,” said Mahaney, who has an outperform rating.
To contact the reporter on this story: Jeran Wittenstein in San Francisco at jwittenstei1@bloomberg.net
To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Richard Richtmyer
©2019 Bloomberg L.P.