Stitch Fix Q1 earnings preview: Focus on active clients’ growth and outlook

After reporting four quarters of earnings since it went public in November 2017, Stitch Fix (SFIX) is scheduled to report its earnings for the first fiscal quarter of 2019 on Monday, December 10, after the market closes. Analysts forecast the online fashion retailer to post earnings of 3 cents per share on revenue of $358 million.

During the fourth quarter earnings announcement, Stitch Fix had guided first quarter 2019 revenue to come in the range of $354 million to $360 million and adjusted EBITDA of $5 million to $9 million. For FY19, the company had touted revenue to be in the range of $1.47 billion to $1.53 billion, representing a year-over-year growth of 20-25%.

For the fourth quarter ended July 28, 2018, Stitch Fix reported earnings of 18 cents on revenue of $318.3 million. While earnings beat analysts’ prediction by 14 cents, revenue missed Street’s targets by a slight margin. Active users annual growth of 25% to 2.7 million for the final quarter of 2018 was less than expected and the dismal guidance sent the stock south.

The San Francisco-based clothing retailer is confident about its future prospects with the recent launch of Stitch Fix Kids and the launch of Stitch Fix UK, which is scheduled at the end of FY19.

Stitch Fix, which provides online personal styling service to its clients, competes with online giant Amazon’s (AMZN) Prime Wardrobe shopping service, which allows Prime members to try the outfits at home for free.

Specialty retailer Ascena Retail Group (ASNA) is also reporting its quarterly results on Monday, while the big-box retailer Costco Wholesale (COST) is set to report its earnings on December 13, Thursday.

At the end of Friday’s trading session, shares of Stitch Fix closed down 7.96% at $26.36. On average, analysts recommend to “Hold” the stock at a consensus price target of $34.67. The stock had gained 8.3% in the past one year and had plunged 41% since it reported Q4 earnings on October 1, 2018.

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