Categories Earnings, Retail

Stitch Fix (NASDAQ: SFIX) likely to post weak Q1 earnings

Stitch Fix Inc. (NASDAQ: SFIX) is set to release its earnings results for the first quarter of fiscal 2020 on Monday after the market closes. The bottom line will be hurt by higher costs and expenses while the top line will be benefited by active clients and net revenue per active client.

As of August 3, 2019, the company had 3.24 million active clients. The company’s data science capabilities consisted of the rich data set and proprietary algorithms, which fuel its business by enhancing the client experience and driving business model efficiencies. The company believes its data science capabilities give a significant competitive advantage in the market.

Read: Kroger Q3 earnings snapshot

During the company’s first five years, much of the client base growth originated from referrals, organic word of mouth, and other methods of discovery as its marketing efforts and expenditures were relatively limited. The company will incur higher marketing expenses in the future by investing more in digital marketing and launching its first television advertising campaigns.

The company currently utilizes both digital and offline channels to attract new visitors to its website or mobile app and subsequently convert them into clients. The existing cash balances and cash flows from operations are likely to be sufficient to meet the company’s working capital and capital expenditure needs for at least the next 12 months.

Analysts expect the company to report a loss of $0.06 per share on revenue of $441 million for the first quarter. In comparison, during the previous year quarter, Stitch Fix posted a profit of $0.10 per share on revenue of $366.2 million. The company has surprised investors by beating analysts’ expectations in all of the past four quarters.

Read: Big Lots Q3 earnings snapshot

For the fourth quarter, Stitch Fix reported a 61% dip in earnings due to higher costs and expenses as well as lesser income taxes benefit. The top line jumped by 36% driven by increases in both active clients and net revenue per active client. The company demonstrated its ability to deliver great client experiences and growing revenue per active client.

Also Read:  Hibbett Sports Inc. (HIBB) Q2 2021 Earnings Call Transcript

Looking ahead into the first quarter, the company expects revenue in the range of $438-442 million, representing a year-over-year growth of 20-21%, and an adjusted EBITDA of $6-9 million. For fiscal 2020, the company predicts revenue of $1.9-1.93 billion and an adjusted EBITDA of $85-105 million.

Get access to timely and accurate verbatim transcripts that are published within hours of the event.

Most Popular

COVID-19 drove retailers up the digital path years ahead than anticipated

Earlier we looked into how, during the COVID-19 pandemic, retailers saw changing trends in terms of their assortments and how the acceleration of online shopping led many of them to

Snowflake (SNOW) creates a record as the most successful software IPO ever; stock more than doubles

Data is at the heart of business innovation. Recognizing this trend, companies are seeking ways to transform their businesses by capturing, analyzing, and mobilizing data. The public cloud is becoming

Adobe (ADBE) sees new tailwinds as virtual shift gathers steam

The second half has been highly rewarding for design software maker Adobe Inc. (NASDAQ: ADBE) amid stable demand for digital content solutions. The company has remained unaffected by the virus-related

Top