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What Stitch Fix's Growth Says About The Future Of Shopping For Clothes

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What Stitch Fix's Growth Says About The Future Of Shopping For Clothes

Stitch Fix Inc's (NASDAQ: SFIX) stock soared after the company reported a surprise fiscal Q1 profit and CFO hire. Besides beating profit and revenue estimates, Stitch Fix announced it hired Amazon.com, Inc. (NASDAQ: AMZN) veteran Dan Jedda as CFO. Shares rose nearly 50%. The strong results, along with accelerated customer growth and upbeat outlook come as dozens of apparel retailers such as J.Crew, Brooks Brothers, Lucky Brand, J.C. Penney and Francesca's Holdings Corp (NASDAQ: FRAN) have filed for bankruptcy protection.

Q1 Results

In addition to double-digit YoY revenue growth for the quarter ending October 31st, Stitch Fix saw the highest sequential net client additions in its history as its active client count grew to nearly 3.8 million. This is both a quarter-over-quarter increase of over 240,000 net active clients and a return to double-digit YoY active client growth. Profit was 9 cents a share on net revenue of $490.4 million, which exceeded both average analyst estimates for a loss of 18 cents and net sales of $481 million, according to Bloomberg.

However, revenue growth of 10% was a far cry from the 21% pace Stitch Fix posted for the comparable period last year, yet Tuesday's stock surge propelled Stitch Fix to an all-time high. The share price likely reflects the expectation that record client growth will continue and bring rewards over the upcoming quarters. But the tech-powered retailer still has to show that it can improve margins.

Building on the momentum, Stitch Fix expects full-year revenue to grow by 20% to 25% , being in the range between $2.05 billion to $2.14 billion, exceeding Wall Street estimates of $2.01 billion.

Outlook

As traditional brick-and-mortar retailers continue to endure double-digit YoY sales declines, Stitch Fix 's results show how the experience of shopping for clothes could be changing for good. Moreover, now that Jedda is bringing his digital video, digital music, advertising and corporate development expertise from Amazon, Stitch Fix's customer value proposition can only be further enhanced. The algorithmically personalized clothing with the help of a stylist has been luring customers to ditch decade-old habits of trying clothing on in a store before paying for them. It might have not been so successful in doing so during the first few months of the pandemic as sales from the quarter that ended on August 1st grew just 3% from a year earlier after falling by more than 9% in the prior period, but this time, Stitch Fix succeeded. In a tumultuous year for the apparel industry, Stitch Fix showed that, with the right help, consumers still have an appetite to buy clothing.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you're interested in becoming an IAM journalist contact: contributors@iamnewswire.com

The post Stitch Fix Won't Be Needing Any Stitches After All appeared first on IAM Newswire.

Photo by Kai Pilger on Unsplash

 

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