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Stitch Fix shares plummet after company cuts guidance for the year

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Stitch Fix is available for downloading in the Apple App Store. It was created in Hastings-on-Hudson (New York), U.S.A. on Saturday June 5, 2021. Stitch Fix Inc. will release earnings on June 7.

Tiffany Hagler Geard | Bloomberg | Getty Images

Stitch FixShares plunged Tuesday in extended trading after online stylist service gave a poor outlook for fiscal third quarter. It also lowered its full-year forecast as it struggled to increase its subscriber base.

According to the company, it faced difficulties in onboarding new customers as well as converting existing clients during its last quarter. Stitch Fix recorded a loss per share in line to analysts’ expectations and revenue slightly more than anticipated for the three months ended January 29.

Stitch Fix, though, is more concerned about the future prospects of its growth. Elizabeth Spaulding is the chief executive. She stated that Stitch Fix’s current client list is not as high as she would like it to. This is despite the company’s recently launched option that allows shoppers to purchase single items on its website without signing up for a subscription. known as Freestyle.

Stitch Fix shares lost more than 17% during extended trading.

This is how Wall Street expected the retailer to do in its fiscal second-quarter. Based on Refinitiv’s survey of analysts:

  • Loss Per Head: 28 cents vs. 28 cents expected
  • Revenue: $516.7 million vs. $514.8 million expected

Stitch Fix posted a net loss in the amount of $30.9million, which is 28c per share. This compares to a loss in $21 million or 20c per share a year ago. The results were in line with analyst estimates.

From $504.1 million in revenue one year prior, revenues grew to $516.7million. This beats estimates of $514.8 millions.

There were slightly over 4 million active clients, which is a 4% increase from the prior year. During the same period, revenue per client was $549.

Stitch Fix considers an active customer a client who has ordered an item through the direct-buy option of the retailer in the 52 previous weeks. This is measured from the end day.

Stitch Fix is expecting net revenue between $485 million to $500 million for the third quarter. That would be a 10%-7% decrease from previous year. Analysts expected sales to reach $560.5 millions.

Stitch Fix expects its fiscal year to end July 30. Revenue is expected to be flat or slightly down from year to year. This assumes that there are no active clients through the 12-month period. Analysts expected revenue growth of 8.1% in the current year.

According to the company, it was actively reviewing its marketing spending to improve onboarding and conversion. Accordingly, the company has removed a previous outlook for full year adjusted earnings before interest taxes and amortization.

The complete press release by Stitch Fix can be found here here.

This is a developing story. Keep checking back for more updates.

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