Why Stitch Fix inventory rose significantly today
The latest quarter wasn’t as bad as analysts had feared.
It is too early for new management. stitch fix (SFIX 26.97%) You could say “mission accomplished,” but the latest quarterly results show that things are definitely moving in the right direction.
Shares of Stitch Fix soared as much as 44.9% at the opening bell on Wednesday and remained up 24% as of 1:30 PM ET after the clothing company reported better-than-expected quarterly results.
style in the box
Stitch Fix is the creator of the “closet in a box” concept, sending subscribers a collection of clothing tailored to their tastes. Customers only pay for the clothing they keep and the rest is returned free of charge.
It’s a concept with a lot of promise, but the results haven’t yet met expectations. Stitch Fix’s stock price has fallen more than 95% from its all-time high due to recurring losses and questions about its strategic direction.
The company hired CEO Matt Baer about a year ago to lead the transition, and the latest results suggest he is making progress. Stitch Fix lost $0.18 per share in its fiscal third quarter on revenue of $322.7 million, beating Wall Street expectations of a loss of $0.25 per share on revenue of $306 million.
The company also forecast fourth-quarter revenue of between $312 million and $322 million, ahead of the consensus of $307 million.
Baer added in a statement that the change efforts are starting to pay off. “We are confident that our strategic focus on strengthening our foundation and reimagining the customer experience will put us on the right path to deliver sustainable and profitable growth in the future.” “
Is Stitch Fix a purchase?
The number of active clients is still decreasing. Down 6% quarter-on-quarter and down 20% from a year ago. Remaining clients are doing more business with the company and have helped Stitch Fix’s net revenue per active user increase 2% over last year. And gross margin was 45.5%, up 280 basis points from the same three months in 2023.
Stitch Fix appears to be stabilizing, but the company still has a long way to go to prove it can deliver profits and growth on a sustainable basis. Long-suffering stock holders finally have reason to be hopeful, but it’s too early to say that the business is finally ready to deliver on all of its early promises.
Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool owns and recommends Stitch Fix. The Motley Fool has a disclosure policy.
