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Stitch Fix (SFIX) Up 26.9% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Stitch Fix (SFIX - Free Report) . Shares have added about 26.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Stitch Fix due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
SFIX’s Q4 Loss Beats Estimates, Client-Centric Innovation Drives Growth
Stitch Fix reported fourth-quarter fiscal 2024 results, wherein the bottom and top lines beat the Zacks Consensus Estimate. The top line deteriorated from the year-earlier quarter. Meanwhile, the bottom line fared better year over year.
More on Stitch Fix’s Q4 Results
Stitch Fix reported an adjusted loss of 12 cents per share, narrower than the Zacks Consensus Estimate of an adjusted loss of 19 cents per share. The metric was also narrower than the loss of 19 cents reported in the year-ago quarter.
SFIX recorded net revenues of $319.6 million, which surpassed the Zacks Consensus Estimate of $317 million. Also, the metric declined 12.4% from the year-ago quarter due to lower net active clients.
The number of active clients engaged in ongoing operations was 2,508,000, marking a year-over-year decline of 19.6%. The average net revenues generated per active client from ongoing operations were $533, representing an increase of 4.5% from the previous year.
Insight Into SFIX’s Margins & Expenses
In the fiscal fourth quarter, the company’s gross profit declined 11.4% to $142.5 million from $160.9 million in the year-ago period. However, the gross margin expanded 50 basis points (bps) year over year to 44.6%, supported by improvements in transportation leverage.
Selling, general and administrative expenses (SG&A) were up 0.3% from $183.8 million in the prior-year quarter to $184.4 million. SG&A expenses, as a percentage of net revenues, were 57.7%, up 730 bps from 50.4% in the prior-year quarter. Advertising was 9% of net revenues, up 210 basis points year over year.
Stitch Fix reported an adjusted EBITDA of $9.5 million compared with $13.1 million in the year-ago quarter, reflecting its ongoing cost-management discipline.
The company ended the fiscal fourth quarter with cash and cash equivalents of $162.9 million, short-term investments of $84.1 million, no debt, net inventory of $97.9 million and shareholders’ equity of $187 million.
The net cash provided by operating activities from continuing operations was $28.2 million and the free cash flow was $4.5 million.
Stitch Fix’s FY25 Guidance
For the first quarter of fiscal 2025, Stitch Fix anticipates revenues to be between $303 million and $310 million, indicating a 15-17% year-over-year decline. Adjusted EBITDA is expected to be in the range of $5-$9 million, indicating a margin of 1.7-2.9%. The gross margin is projected to remain steady between 44% and 45% for both the first quarter and the full year, with advertising expenses constituting approximately 8-9% of revenues.
Additionally, inventory levels are expected to rise in the first quarter due to the fall/winter product cycle but will stabilize in the fiscal second quarter, with improved inventory turns throughout the remainder of the fiscal year. This outlook indicates that Stitch Fix is focusing on careful cost management while navigating seasonal inventory fluctuations and maintaining stable margins.
The outlook for SFIX in fiscal 2025 reflects a cautious yet optimistic approach, with total revenues expected to range between $1.11 billion and $1.16 billion, indicating a 12-16% year-over-year decline when adjusted to a standard 52-week period. The company is also projecting total adjusted EBITDA to be between $14 million and $28 million with a margin of 1.3-2.4%. It also expects to achieve positive free cash flow despite variability between quarters due to inventory purchase timing.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 34.62% due to these changes.
VGM Scores
Currently, Stitch Fix has a great Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Stitch Fix has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Stitch Fix (SFIX) Up 26.9% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Stitch Fix (SFIX - Free Report) . Shares have added about 26.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Stitch Fix due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
SFIX’s Q4 Loss Beats Estimates, Client-Centric Innovation Drives Growth
Stitch Fix reported fourth-quarter fiscal 2024 results, wherein the bottom and top lines beat the Zacks Consensus Estimate. The top line deteriorated from the year-earlier quarter. Meanwhile, the bottom line fared better year over year.
More on Stitch Fix’s Q4 Results
Stitch Fix reported an adjusted loss of 12 cents per share, narrower than the Zacks Consensus Estimate of an adjusted loss of 19 cents per share. The metric was also narrower than the loss of 19 cents reported in the year-ago quarter.
SFIX recorded net revenues of $319.6 million, which surpassed the Zacks Consensus Estimate of $317 million. Also, the metric declined 12.4% from the year-ago quarter due to lower net active clients.
The number of active clients engaged in ongoing operations was 2,508,000, marking a year-over-year decline of 19.6%. The average net revenues generated per active client from ongoing operations were $533, representing an increase of 4.5% from the previous year.
Insight Into SFIX’s Margins & Expenses
In the fiscal fourth quarter, the company’s gross profit declined 11.4% to $142.5 million from $160.9 million in the year-ago period. However, the gross margin expanded 50 basis points (bps) year over year to 44.6%, supported by improvements in transportation leverage.
Selling, general and administrative expenses (SG&A) were up 0.3% from $183.8 million in the prior-year quarter to $184.4 million. SG&A expenses, as a percentage of net revenues, were 57.7%, up 730 bps from 50.4% in the prior-year quarter. Advertising was 9% of net revenues, up 210 basis points year over year.
Stitch Fix reported an adjusted EBITDA of $9.5 million compared with $13.1 million in the year-ago quarter, reflecting its ongoing cost-management discipline.
SFIX’s Financial Snapshot: Cash, Inventory & Equity Overview
The company ended the fiscal fourth quarter with cash and cash equivalents of $162.9 million, short-term investments of $84.1 million, no debt, net inventory of $97.9 million and shareholders’ equity of $187 million.
The net cash provided by operating activities from continuing operations was $28.2 million and the free cash flow was $4.5 million.
Stitch Fix’s FY25 Guidance
For the first quarter of fiscal 2025, Stitch Fix anticipates revenues to be between $303 million and $310 million, indicating a 15-17% year-over-year decline. Adjusted EBITDA is expected to be in the range of $5-$9 million, indicating a margin of 1.7-2.9%. The gross margin is projected to remain steady between 44% and 45% for both the first quarter and the full year, with advertising expenses constituting approximately 8-9% of revenues.
Additionally, inventory levels are expected to rise in the first quarter due to the fall/winter product cycle but will stabilize in the fiscal second quarter, with improved inventory turns throughout the remainder of the fiscal year. This outlook indicates that Stitch Fix is focusing on careful cost management while navigating seasonal inventory fluctuations and maintaining stable margins.
The outlook for SFIX in fiscal 2025 reflects a cautious yet optimistic approach, with total revenues expected to range between $1.11 billion and $1.16 billion, indicating a 12-16% year-over-year decline when adjusted to a standard 52-week period. The company is also projecting total adjusted EBITDA to be between $14 million and $28 million with a margin of 1.3-2.4%. It also expects to achieve positive free cash flow despite variability between quarters due to inventory purchase timing.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 34.62% due to these changes.
VGM Scores
Currently, Stitch Fix has a great Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Stitch Fix has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.