Why Stitch Fix Shares Are Sliding After Q3 Results?

  • Stitch Fix Inc SFIX reported a third-quarter revenue decline of 8% year-over-year to $492.9 million, missing the consensus of $493.26 million.
  • Q3 Active clients stood at 3,907,000, a decrease of 5% Y/Y. Net revenue per active client (RPAC) increased 15% Y/Y to $553.
  • The gross margin declined 338 bps to 42.6%. The operating loss widened to $78.04 million from a loss of $18.48 million a year ago.
  • EPS was $(0.72), below the consensus of $(0.55).
  • SFIX reported an Adjusted EBITDA loss of $(36.02) million, compared to $11.63 million in 3Q21.
  • Net cash provided by operating activities YTD was $94.45 million, versus cash used of $(35.06) million a year ago.
  • Organizational update: The Company has decided to reduce its workforce; the reduction includes ~15% of salaried positions and represents ~4% of roles in total. Stitch Fix expects annual cost savings of $40 million to $60 million in FY23.
  • The Company expects to incur restructuring and other one-time charges of ~$15 million to $20 million to be recognized in 4Q22.
  • 4Q22 Outlook: SFIX sees net revenue of $485 million - $495 million vs. consensus of $495.05 million; and Adjusted EBITDA of $(30) million - $(25) million.
  • Price Action: SFIX shares are trading lower by 12.80% at $6.78 during the post-market session on Thursday.

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