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Stitch Fix Does Not Expect Shoppers to Splurge This Holiday Season

Source: Stitch Fix
By
  • Reuters

SAN FRANCISCO, United States — Online personal-shopping company Stitch Fix said on Monday it expects active client counts to be relatively flat from the first quarter as it does not expect its shoppers to splurge during the holiday season.

The San Francisco-based company's shares, which rose nearly 8 percent after reporting first-quarter revenue and profit beat, reversed course to fall 12 percent to $23 afterhours. Stitch Fix offers personalized services based on a survey filled out by the customer as well as using a combination of its algorithm and personal stylists, providing apparel and accessories matching the clients' taste, lifestyles and budgets.

Unlike other retailers, Stitch Fix said it does not expect to benefit from the holiday quarter as it sees more shoppers focusing on buying gifts for others than themselves.

"Historically, we have experienced lower quarter-over-quarter net revenue growth in the fiscal Q2 due to slower active client growth during the holiday season," the company said in a letter to its shareholders.

Stitch Fix considers active clients as those who received a package of curated clothing in the preceding 12-month period. Most of the company's clients mainly shop for themselves.

For the second quarter, Stitch Fix said it expects active client counts to be relatively flat from the first quarter, while revenue per client is expected to grow.

Stitch Fix forecast its second-quarter net revenue in the range of $360 million to $368 million, while analysts are expecting revenue of $362 million.

The company's active clients surged 22 percent to 2.9 million in the first-quarter ended Oct. 27, mainly driven by its broad offerings.

"In plus (size category), we continue to get great client feedback on the fit of our denim, and have expanded our offerings there too," the company's Chief Operating Officer Mike Smith said. Stitch Fix said it has added several brands, including Michael Kors, Madewell and The North Face for women, as well as expanded its sizes for men, offering up to 3XL and a 48-inch waist.

The company is also investing heavily in expanding its men's and kid's offerings, while it plans to introduce its services in the U.K.

Net income attributable to the company's shareholders rose to $10.7 million, or 10 cents per share, from $1.3 million, or 4 cents per share, a year earlier. Revenue surged 24 percent to $366.2 million.

Analysts had forecast the company to earn 3 cents per share on a revenue of $358 million, according to IBES data from Refinitiv.

By Nivedita Balu; Editor: James Emmanuel.

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