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Stitch Fix (SFIX) Gains on Better-Than-Expected Q1 Earning
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Shares of Stitch Fix, Inc. (SFIX - Free Report) have surged 33.6% during the after-market trading session on Dec 7, following robust first-quarter fiscal 2021 results. The top and the bottom line not only beat the Zacks Consensus Estimate but also improved year over year. In fact, the company swung back to profits, after posting a loss in the last reported quarter.
Quarterly results gained from growth in active client base. Additionally, the company’s prudent innovations in fix and direct buy offerings are garnering positive response from customers. The company also provided an encouraging top-line view for the second quarter as well as for fiscal 2021, backed by expectations of continued growth in its active client base.
In a separate release, the company announced the appointment of a new CFO — Dan Jedda — effective from Dec 9. Markedly, Dan Jedda previously served at Amazon.com, Inc. (AMZN - Free Report) as vice president and CFO for Digital Video, Digital Music, Advertising and Corporate Development organizations.
We note that Stitch Fix’s shares have gained 24.5% in the past three months compared with the industry’s surge of 54.5%.
Q1 in Details
Stitch Fix reported earnings of 9 cents per share, which beat the Zacks Consensus Estimate of a loss of 17 cents. The figure also marks an improvement from break-even earnings in the prior-year quarter. The surprise profit came in after witnessing a loss of 44 cents in fourth-quarter fiscal 2020.
Meanwhile, the company recorded net revenues of $490.4 million, reflecting an increase of 10% from the year-ago quarter. The reported figure surpassed the Zacks Consensus Estimate of $481.2 million. Rise in active clients primarily supported the top line. Additionally, efforts to boost women’s and kid’s assortments are yielding.
Stitch Fix now has 3.8 million active clients, up 10% from the prior-year quarter’s levels. Sequentially, the company’s active clients went up by more than 240,000. Management highlighted that this marks the company’s highest sequential client additions.
However, revenues per active client declined nearly 4% year over year to $467. This was mainly due to surge in new clients, whose spending has been comparatively low. Nevertheless, even new clients have been exhibiting encouraging purchasing behavior in first fixes. This indicates greater retention and increased value for the company in the long run.
In fiscal first quarter, gross profit rose 9% to $219.5 million. However gross-margin contracted 60 basis points (bps) to 44.7%, owing to higher shipping expenses. This was partially offset by reduced inventory reserves and clearance rates.
Meanwhile, selling, general, and administrative (SG&A) expenses increased almost 19% to $239 million. Excluding advertising, other SG&A, as a rate of sales, increased 440 bps to 38.2% due to higher marketing expenses as well as continuous investments in technology talent and the related stock-based compensation (SBC) costs. Moreover, this Zacks Rank #4 (Sell) company’s operating loss was $19.5 million against operating profit of $1.6 million reported in the year-ago quarter.
Furthermore, the company reported adjusted EBITDA, excluding SBC, of $6.9 million in the quarter under review, down almost 60% from $17.3 million reported in the year-ago quarter.
Stitch Fix, Inc. Price, Consensus and EPS Surprise
Stitch Fix ended the quarter with no debt along with cash and cash equivalents of $200.3 million and shareholders’ equity of $428.6 million.
Further, the company provided $57.4 million cash from operating activities during the first quarter of fiscal 2021. Also, it reported free cash flow of $51.4 million for the same period.
Outlook
Management provided its view for the fiscal second quarter, on anticipations that the company’s fulfillment centers will remain operational without facing any disruptions stemming from the coronavirus pandemic. In fact, the company expects the current growth trends to sustain through the second quarter and into the back half of fiscal 2021.
Accordingly for second-quarter fiscal 2021, management projects revenues in the range of $506-$515 million. The projection marks an improvement of 12-14% year on year, fueled by growth in active client base.
Further, it expects advertising expenses, as a percentage of revenues in the bracket of 11-13% in the quarter. Adjusted EBITDA loss is expected in the range of $6-$3 million.
For fiscal 2021, the company anticipates revenues in the band of $2.05-$2.14 billion, which suggests 20-25% growth year on year.
L Brands, Inc. (LB - Free Report) has a long-term earnings growth rate of 13% and a Zacks Rank #1.
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Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
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Stitch Fix (SFIX) Gains on Better-Than-Expected Q1 Earning
Shares of Stitch Fix, Inc. (SFIX - Free Report) have surged 33.6% during the after-market trading session on Dec 7, following robust first-quarter fiscal 2021 results. The top and the bottom line not only beat the Zacks Consensus Estimate but also improved year over year. In fact, the company swung back to profits, after posting a loss in the last reported quarter.
Quarterly results gained from growth in active client base. Additionally, the company’s prudent innovations in fix and direct buy offerings are garnering positive response from customers. The company also provided an encouraging top-line view for the second quarter as well as for fiscal 2021, backed by expectations of continued growth in its active client base.
In a separate release, the company announced the appointment of a new CFO — Dan Jedda — effective from Dec 9. Markedly, Dan Jedda previously served at Amazon.com, Inc. (AMZN - Free Report) as vice president and CFO for Digital Video, Digital Music, Advertising and Corporate Development organizations.
We note that Stitch Fix’s shares have gained 24.5% in the past three months compared with the industry’s surge of 54.5%.
Q1 in Details
Stitch Fix reported earnings of 9 cents per share, which beat the Zacks Consensus Estimate of a loss of 17 cents. The figure also marks an improvement from break-even earnings in the prior-year quarter. The surprise profit came in after witnessing a loss of 44 cents in fourth-quarter fiscal 2020.
Meanwhile, the company recorded net revenues of $490.4 million, reflecting an increase of 10% from the year-ago quarter. The reported figure surpassed the Zacks Consensus Estimate of $481.2 million. Rise in active clients primarily supported the top line. Additionally, efforts to boost women’s and kid’s assortments are yielding.
Stitch Fix now has 3.8 million active clients, up 10% from the prior-year quarter’s levels. Sequentially, the company’s active clients went up by more than 240,000. Management highlighted that this marks the company’s highest sequential client additions.
However, revenues per active client declined nearly 4% year over year to $467. This was mainly due to surge in new clients, whose spending has been comparatively low. Nevertheless, even new clients have been exhibiting encouraging purchasing behavior in first fixes. This indicates greater retention and increased value for the company in the long run.
In fiscal first quarter, gross profit rose 9% to $219.5 million. However gross-margin contracted 60 basis points (bps) to 44.7%, owing to higher shipping expenses. This was partially offset by reduced inventory reserves and clearance rates.
Meanwhile, selling, general, and administrative (SG&A) expenses increased almost 19% to $239 million. Excluding advertising, other SG&A, as a rate of sales, increased 440 bps to 38.2% due to higher marketing expenses as well as continuous investments in technology talent and the related stock-based compensation (SBC) costs. Moreover, this Zacks Rank #4 (Sell) company’s operating loss was $19.5 million against operating profit of $1.6 million reported in the year-ago quarter.
Furthermore, the company reported adjusted EBITDA, excluding SBC, of $6.9 million in the quarter under review, down almost 60% from $17.3 million reported in the year-ago quarter.
Stitch Fix, Inc. Price, Consensus and EPS Surprise
Stitch Fix, Inc. price-consensus-eps-surprise-chart | Stitch Fix, Inc. Quote
Other Financial Aspects
Stitch Fix ended the quarter with no debt along with cash and cash equivalents of $200.3 million and shareholders’ equity of $428.6 million.
Further, the company provided $57.4 million cash from operating activities during the first quarter of fiscal 2021. Also, it reported free cash flow of $51.4 million for the same period.
Outlook
Management provided its view for the fiscal second quarter, on anticipations that the company’s fulfillment centers will remain operational without facing any disruptions stemming from the coronavirus pandemic. In fact, the company expects the current growth trends to sustain through the second quarter and into the back half of fiscal 2021.
Accordingly for second-quarter fiscal 2021, management projects revenues in the range of $506-$515 million. The projection marks an improvement of 12-14% year on year, fueled by growth in active client base.
Further, it expects advertising expenses, as a percentage of revenues in the bracket of 11-13% in the quarter. Adjusted EBITDA loss is expected in the range of $6-$3 million.
For fiscal 2021, the company anticipates revenues in the band of $2.05-$2.14 billion, which suggests 20-25% growth year on year.
More Hot Stocks to Consider
Capri Holdings Limited (CPRI - Free Report) , flaunting a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 5.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
L Brands, Inc. (LB - Free Report) has a long-term earnings growth rate of 13% and a Zacks Rank #1.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>