Stitch Fix’s days of showing consistent growth since its initial public offering last November may be coming to an end with fiscal fourth-quarter results that produced revenue that was shy of Wall Street expectations.
The Wall Street Journal, citing the online personalized styling service, reported the company had fourth-quarter earnings of $0.18 a share, which was $0.06 a share higher than Wall Street expectation — although revenue was short of what Wall Street was looking for at $318.3 million. More important to gauge Stitch Fix's growth is how many customers stayed with the service, and the company missed those estimates for the fourth quarter as well. Wall Street was expecting the company to have 2.8 million active clients by the end of its fiscal fourth quarter, but the number stayed flat at 2.7 million. That is where it ended the third quarter, noted the paper. It is 25 percent higher than a year ago, noted the Wall Street Journal. The results pressured Stitch Fix stock in after-hours trading Monday (October 1).
The fourth quarter results will undoubtedly put more pressure on the company to meet estimates in the next few quarters. It is aiming to grow the business by adding clothing for men, kids and plus size women. Analysts had expected it to have 3 million active customers by the fiscal first quarter, noted the paper, citing FactSet. It also announced plans Monday (October 1) to expand into the U.K. by the end of this fiscal year. Still, the Wall Street Journal noted that Stitch Fix's flat numbers when it comes to its core customer — which is the American woman — is a big red flag. If it misses the active customer estimates again, the WSJ argued investors will have good reason to expect Stitch Fix to have the same experience as Blue Apron and Birchbox, two subscription services that were high flying in the beginning only to lose their novelty with customers.