Stitch Fix reaches 26% after exceeding earnings and revenue forecasts

Stitch Fix shares jumped 25 percent in aftermarket trading on Wednesday, after the online personal styling company said it surpassed earnings and sales guidance for the third quarter of fiscal 2019, helped by healthy growth of her feminine activity and the rise of her activities for men. business.

Here is what the company reported about what Wall Street was waiting for, according to a poll of analysts made by Refinitiv:

• Earnings per share: 7 cents versus expected loss of 3 cents
• Turnover: $ 408.9 million against $ 394.9 million

For the third quarter ended April 27, Stitch Fix said its net income dropped to $ 7 million, or 7 cents a share, from $ 9.5 million, or 9 cents a share, a year ago. . Analysts have predicted the results with a loss of 3 cents per share, according to a Refinitiv poll.

Its active customers – those who received a box of clothing in the previous 12 months – reached 3.1 million, an increase of 17% over the previous year.

Stitch Fix has recorded seven consecutive quarters of revenue growth of more than 20% since it became a publicly traded company in 2017. Third quarter sales in 2019 have increased 29% to $ 408.9 million, well above the expected 394.9 million analysts.

"These results demonstrate our ability to attract new customers and serve our existing customers," said Katrina Lake, founder and CEO of Stitch Fix, in a statement. "The continued strength of our Women category and the growth of our Men category gives us even greater confidence in our ability to evolve new categories and geographic areas, and in the meantime, I am excited about the opportunities that lie ahead for us to continue to grow. more customers from around the world. "

In a letter to shareholders, the company said it used predictive algorithms to better reach customers "who have attributes that lead to long-term relationships." Stitch Fix said it has strengthened its men's business by expanding its product mix and adding more exclusive brands to its selection.

The company also attributed to its Style Pass service, old one year old, improved customer retention, average revenue growth per customer and customer satisfaction by report to customers other than Style Pass. The service offers unlimited style for an annual amount of $ 49, which is credited for items purchased by a customer. Stitch Fix stated that Style Pass renewal rates were 70% for men's and women's activities.

The company raised its revenue forecast for 2019 from $ 1.57 billion to $ 1.58 billion from $ 1.53 billion to $ 1.56 billion. For the fourth quarter, revenues will be in the range of $ 425 to $ 435 million.

Adjusted EBITDA will be in the range of $ 5 to $ 10 million in the fourth quarter and $ 38 to $ 43 million for the year.

In the second quarter of 2019, the company launched a new algorithm application that allows it to predict demand for products using data obtained from style journals and questionnaires about the application. Lake partially attributed the algorithm to the strong performance of the company during the quarter.

Stitch Fix also unveiled at the beginning of the third quarter a brand marketing campaign to educate consumers by describing how their service works. In May, the company was established in the United Kingdom, which should affect profit forecasts.

The company, whose market capitalization is $ 2.4 billion, has seen its stock increase by 38% since the beginning of the year.