Stitch Second Quarter Report Revised; Positive Growth A Few Quarters Ahead, According to Analyst Investing.com

© Reuters. Stitch Fix (SFIX) is down in its second quarter report. According to analysts, there will be positive growth in a few quarters.

stock stitch fix (NASDAQ:) fell more than 10% in premarket trading Tuesday after the company’s fiscal second-quarter results and guidance broadly missed analyst estimates.

The online personal styling services provider reported a second-quarter loss of $0.29 per share, wider than the $0.22 per share loss analysts had expected. Revenue was $330.4 million, while analysts were looking for $330.8 million.

Gross margin for the quarter was reported at 43.4%, a 250 basis point improvement over the prior year but 10 basis points below expectations.

Stitch Fix expects third-quarter 2024 revenue to range from $300 million to $310 million, short of the $322.3 million analysts had estimated.

For the full fiscal year, the company expects revenue to range between $1.29 billion and $1.32 billion, which is also below the consensus estimate of $1.35 billion.

In the wake of the report, Bernstein analysts lowered their price target to $3.5 and maintained a Market Perform rating on the stock.

“After a difficult second quarter with small missteps and larger H2 cuts, SFIX is still several quarters away from positive growth,” they said in a note.

“Because Mgmt prioritizes quality over quantity, it is churning out low-value customers and adding fewer high-value customers… It’s a margin tailwind, but it will ultimately limit growth to about MSD%, bringing the valuation to about 3.50. Limited to dollars.”