Should Stitch Fix Get More Credit for Its Q1 Earnings?

When Stitch Fix Inc. (NASDAQ: SFIX) reported its fiscal first-quarter financial results after the markets closed on Monday, the company said that it had $0.10 in earnings per share (EPS) and $366.2 million in revenue. That compared with consensus estimates of $0.03 in EPS and $357.8 million in revenue, as well as the $0.04 per share and $295.56 million posted in the same period of last year.

During the most recent quarter, active clients increased 22% year over year to 2.90 million. This fell short of analysts’ expectations calling for 2.95 million active clients.

Also in this time, the firm added new brands to the platform across Women’s, Men’s and Kids, including Michael Kors, Madewell, The North Face, Bonobos and Converse. In Men’s, Stitch Fix launched expanded sizing, offering up to 3XL and a 48-inch waist as well as short and tall fit options. In Plus, management said that it continues to get great client feedback on the fit of its denim, and have expanded offerings there as well.

The company did not offer any guidance in the report. However, the consensus estimates call for $0.05 in EPS and $362.06 million in revenue for the fiscal second quarter.

On the books, Stitch Fix cash, cash equivalents and short-term investments totaled $258.6 million, down from $297.5 million at the end of the previous fiscal year.

Mike Smith, president and chief operating officer of Stitch Fix, commented:

We are proud of our results; Q1 was another strong quarter for us. We grew our active client count to 2.9 million, an increase of 22% year over year and delivered net revenue of $366.2 million for the quarter, representing 24% year-over-year growth, with adjusted EBITDA of $14.3 million. We continue to demonstrate our ability to deliver growth and exceptional client experiences across all of our categories.

Shares of Stitch Fix closed Monday at $25.97, in a 52-week range of $18.00 to $52.44. The consensus analyst price target is $34.67. Following the announcement, the stock was down 17% at $21.50 in early trading indications Tuesday.