Why Stitch Fix Failed to Impress in Q3

Stitch Fix Inc. (NYSE: SFIX) released its fiscal third-quarter financial results after the markets closed on Monday. The firm said that it had a net loss of $0.33 per share on $371.7 million in revenue, compared with consensus estimates that called for a net loss of $0.15 per share and $404.68 in revenue. The same period of last year reportedly had $0.07 in EPS and $432.15 million in revenue.

During the quarter, active clients increased 9% year over year to 3.4 million, and net revenue per active client increased 6% to $498.

Deferred revenue came in at $14.69 million, an increase from $12.00 million at the end of last year’s fiscal fourth quarter.

The company had $241.6 million in cash, cash equivalents and short-term investments at the end of the quarter.

The company did not mention any guidance in the earnings report. However, founder and CEO Katrina Lake noted that the company expects to see a return to positive growth in the fourth quarter. Analysts are calling for a net loss of $0.01 per share and $463.44 million in revenue for the fiscal fourth quarter.

Lake added:

Our results give us confidence in the resilience and increasing relevance of our model as more people than ever before seek out a better online shopping experience, rooted in what is meaningful and right for them. Through a combination of innovating the Fix model and expanding Direct Buy, we are excited to expand the Stitch Fix ecosystem, and unlock personal styling for everybody.

Stitch Fix stock closed Monday at $24.92, in a 52-week range of $10.90 to $32.34. The consensus price target is $19.69. Following the announcement, the stock was down about 6.5% at $23.29 in early trading indications Tuesday.