Stitch Fix Grows But Shares Unravel

There’s good news and bad news for Stitch Fix: Although its revenue for the second quarter beat expectations, the company still saw its shares fall 6 percent on Monday.

According to TechCrunch, while analysts had expected an earnings per share of six cents, the company posted a diluted earnings per share of two cents, as well as an adjusted earnings per share of seven cents.

But the company did bring in $295.9 million in revenue, 24 percent more than last year and better than the predicted $291.24 million. In addition, the online style subscription service now has 2.5 million clients — a 31 percent boost from the same period last year.

After its 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.

“Generally we feel really good about retention and our ability to re-engage clients when they’ve taken a break from us,” Smith said. “The difference is we’re now looking at better ways to use data science as it relates to optimizing on both acquiring clients as well as looking at re-engagement activities. With all the data we have, we think we can be best-in-class for personalized mentions for bringing them back when they have great products.”

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

“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,” said CEO Katrina Lake.