Shares of Stitch Fix rose 14% in extended trading Tuesday after the online shopping and style service reported a surprise profit for its fiscal fourth quarter.
Month period ending July 31 were also higher than analysts expected, thanks to huge growth in Stitch Fix’s women’s and children’s categories. Menswear has been growing more slowly, the company said. Consumers have been splurging on new clothes in recent months as many head back to school and back to social gatherings. Some have also mentioned the need for new clothes after gaining losing weight during the Covid pandemic.
Here’s how Stitch Fix did compared to what Wall Street expected, according to a survey of Refinitiv analysts Net income attributable to shareholders was $ 28 million, or 19 cents per share, in the most recent period. A year ago, he posted a net loss of $ 44.5 million, or 44 cents a share. Analysts had expected the company to post a loss of 13 cents a share. Revenue increased to $ 571.2 million from $ 443.4 million the previous year.
That was better than analyst expectations of $ 548 million. Stitch Fix reported nearly 4.2 million active customers, 18% more than the previous year. The company said net revenue per active customer was $ 505, breaking the $ 500 threshold for the first time. Customers have been shopping for more items to keep at home, Stitch Fix said, as they have more brands and price points to choose from.
Stitch Fix defines active customers as people who requested a “Fix” subscription or purchased an item directly from its website in the previous 52 weeks since the last day of the quarter. The company also said it had its lowest churn rate at the end of the period, meaning its customers stick around. Last month, Stitch Fix finally opened its direct purchase option, now known as “Freestyle,” to the public.
This allows people to purchase Stitch Fix for individual garments, without the need to sign up for a subscription. CEO Elizabeth Spaulding said this should help Stitch Fix grow its addressable market in the coming year. The company’s next initiative will be to market and raise awareness of the offering, she said. Stitch Fix is gearing up to launch a national ad campaign on debut.
Early signs are that “Freestyle” significantly increases the company’s revenue by active customer metric, Spaulding told analysts on a conference call. Customers have agency, flexibility and choice while experiencing a highly personalized shopping experience,” said Spaulding. While the entire retail industry is sorting out supply chain complications.