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The Stitch Fix share lost a fifth of its value after the company released a quarterly profit higher than analysts' estimates, but a slightly lower-than-expected business figure. The results were not strong enough to dispel investors' concerns about the company's ability to take Amazon.
Stitch Fix, a subscription-based teleshopping service, began by breaking its stock on a pay-off basis before plunging 20% to $ 35.02 per share, its lowest price in more than a month.
The company reported revenues of $ 318.3 million in the fourth quarter of its fiscal year ended July 28, up 23% from the same quarter last year. Analysts expected revenue of $ 318.6 million. Stitch Fix also said that active customers increased by 25% to 2.7 million, which is lower than the forecast of 2.81 million StreetAccount customers.
If the turnover was slightly below expectations, Stitch Fix said the current quarter's business figure could be lower than analysts' forecasts. Stitch Fix sees its revenue for the first quarter of its fiscal year range between $ 354 and $ 360 million. Analysts were expecting revenues in the upper half of this range, at $ 359 million.
This sale reflects what appears to be less a sense of disappointment over the last quarter of Stitch Fix and more a growing sense of caution about the startup's ability to compete with Amazon. Last month, Amazon began testing Scout, a personalized shopping recommendation service that is currently focused on home design. Scout could easily go into fashion, which would give Stitch Fix a formidable competitor.
Stitch Fix was part of a handful of technology startups IPOs late last year, paving the way for a good 2018 year for IPOs in technologies. Shares in Stitch Fix reached $ 51.19 a share in September, a 240% gain over its offering price, before the news about Amazon Scout caused it to fall.
In a statement, Stitch Fix CEO Katrina Lake described the quarter as "another strong quarter for us" and announced that the company was expanding into the UK market. "We are confident that our ability to create a unique and personalized shopping experience will be an asset to consumers and brands outside the United States," said Lake.
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