Stitch Fix Surprises Wall Street, Debuts Stitch Fix Kids

Along with announcing the launch of Stitch Fix Kids, apparel company Stitch Fix announced that it beat Wall Street expectations on Thursday (June 7), which sent its shares soaring.

The company released the financial results for its third quarter of fiscal year 2018, which ended April 28. Highlights of the result included delivering 2.7 million active clients, an increase of 30 percent year over year; net revenue of $316.7 million, an increase of 29 percent year over year; net income of $9.5 million and adjusted EBITDA of $12.4 million; and diluted earnings per share of $0.09.

Stitch Fix Founder and CEO Katrina Lake said in a press release, “In addition to driving strong net revenue, net income and adjusted EBITDA, we grew our active client count to 2.7 million, an increase of 30 percent year over year. We continue to balance growth and profitability, demonstrated by our ability to consistently deliver top-line growth of over 20 percent, even as we invest in category expansions, technology talent, and marketing. Our third quarter results demonstrate continued positive momentum for Stitch Fix and the power of our unique ability to deliver personalized service at scale.”

In addition, Stitch Fix revealed the upcoming launch of Stitch Fix Kids.

“Our new Stitch Fix Kids offering is a testament to the scalability of our platform,” Lake added. “We’re excited for Stitch Fix to style everyone in the family and to create an effortless way for parents to shop for themselves and their children. Our goal is to provide unique, affordable kids clothing in a wide range of styles, giving our littlest clients the freedom to express themselves in clothing that they love and feel great wearing.”

The news sent the company’s shares soaring 14 percent, but eventually came back down to end the day up 4 percent.

After its initial public offering (IPO) in November, there was concern from investors about customer retention, with Stitch Fix COO Mike Smith revealing that the company is deploying data science so it can re-engage its customers to come back to the service after taking a break.

Stitch Fix also recently launched an undergarments business, which the company believes will help its overall growth.

Lake said, “In addition to strong momentum across our men’s and women’s categories, we’re excited about the potential of Extras, a new capability that allows us to serve more of our client’s wardrobe, while increasing incremental revenue.”


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