Stitch Fix Jumps 10% After Beating Fiscal Q1 Guidance

The company’s quarterly numbers were strong, but its guidance left a lot to be desired.

2019 has been a good year for Stitch Fix, and the company’s shares are up 57% year to date. And this week, shares of Stitch Fix jumped more than 10% after the company released its fiscal first-quarter earnings report. 

The company exceeded its earnings and revenue guidance, and its active clients grew by more than 16% year over year. However, the company did lower its full-year guidance, and management announced that the company’s CFO is planning to leave.

An overview of Stitch Fix’s Q1 results

Stitch Fix’s fiscal first-quarter ended on Nov. 2, and overall, the results were pretty solid. The company’s revenue reached $444.8 million, which is up 21% from a year earlier. And Wall Street was calling for revenue between $438 million and $442 million, so Stitch Fix blew those expectations out of the water.

Investors were expecting the company to report a loss of 6 cents per share, but the company managed to break even. And best of all, the company’s active clients grew to 3.4 million, and its net revenue per active client rose by 9.5%. 

However, the company’s 2020 guidance didn’t leave investors with much to be excited about. Stitch Fix expects its full-year revenue to fall between $1.90 billion and $1.93 billion. The lower range of this guidance falls short of the $1.92 billion Wall Street was expecting. 

And the company’s second-quarter guidance left a lot to be desired. Stitch Fix expects its second-quarter sales to fall between $447 million to $455 million. In comparison, Wall Street was calling for the company to bring in $456.5 million.

Stitch Fix also announced that its chief financial officer, Paul Yee, is leaving the company to pursue other ventures. The company is also bringing on Elizabeth Spaulding to serve as President and report to CEO Katrina Lake. 

Bottom Line

Stitch Fix has had a good year, and investors have a lot to be happy about when it comes to the company. Stitch Fix continues to not only bring on new active clients but find ways to get its current clients to spend more money. According to CEO Katrina Lake, this is largely thanks to the company’s direct-buy initiatives. 

However, the company may soon have some competition in this area. Amazon is launching its own clothing service for its Prime members. 

Amazon customers can employ a team of shoppers to help them make clothing selections based on their style and shopping habits. This has the potential to disrupt Stitch Fix’s growth down the road.