Categories AlphaGraphs, Consumer, Earnings

Stitch Fix (SFIX) Stock: Will the innovative biz model survive virus-led slump?

The company returned to profitability in the fourth quarter of fiscal 2021, after staying in the negative territory in the trailing two quarters

The business world is still struggling to come out of the virus-induced slowdown, but it seems almost every retail segment benefited from the pandemic at some point. The vaccination drive and reopening brightened consumer sentiment and people have started spending on discretionary items like apparel and footwear once again. Online personal styling company Stitch Fix, Inc. (NASDAQ: SFIX) posted strong growth in the most recent quarter, continuing its recovery from last year’s slump.

Buy SFIX?

The Silicon Valley firm’s stock price reached an all-time high early this year, after making strong gains in the second half of 2020. However, it changed course pretty quickly and the value has more than halved since then. SFIX got a much-needed boost this week after the impressive earnings report triggered a rally. But the underlying volatility is a dampener as far as short-term prospects are concerned, which needs to be taken into consideration before making investment decisions.


Read management/analysts’ comments on quarterly reports


It would make sense to keep it on the watch-list for the time being and wait for further updates before buying/selling the stock. A clearer picture should emerge before the next earnings release. Meanwhile, experts believe Stitch Fix’s long-term prospects are intact and predict double-digit growth this year.

Unique Model

With its disruptive business model, the company redefined fashion retail by offering personalized styling supported by advanced technology. The unique approach drives demand growth across all business segments, including Kids’, Women’s, and the U.K., which gives the company an advantage over rivals. Its addressable market expanded further after the launch of Stich Fix Freestyle in August this year, which allows customers to make direct purchases.

Elizabeth Spaulding, who took over as Stich Fix’s CEO a few months ago, said, “Our vision is to become the global destination for personalized shopping, styling and inspiration, supporting clients across all categories and occasions. In a world where authentic human touch and the ability to know me matters more than ever, we help clients to build confidence in discovering items and looks that they otherwise would not have considered. Our continued success serving clients in the U.S., as well as the U.K., also gives us conviction in our opportunity to build this ecosystem on a global scale.”

Strong Q4

The company returned to profitability in the fourth quarter of fiscal 2021, after staying in the negative territory in the trailing two quarters. Net revenues climbed 29% annually to $571.2 million and topped the market’s projection. That translated into earnings of $0.19 per share, which marked an improvement from last year’s loss of $0.44 per share. The bottom-line topped expectations in every quarter during the fiscal year. Encouraged by the solid outcome, the management is currently projecting around 15% revenue growth for the first quarter and fiscal 2022.


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Stitch Fix’s shares gained about 16% since Tuesday’s earnings announcement and maintained the uptrend throughout Wednesday and closed the session sharply higher. The stock has gained about 58% in the past twelve months.

Looking for more insights on the earnings results? Click here to access the full transcripts of the latest earnings conference calls!

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