Stitch Fix shares slide after earnings disappoint
NEW YORK - Stitch Fix's (SFIX) first earnings report as a public company has disappointed Wall Street, sending the internet apparel company's stock price plunging in after-hours trading.
The online-based clothing styling service said Tuesday it expects to make less money from the boxes of clothes it sends customers, due to rising shipping costs and having fewer products available in distribution centers for newer categories, such as men's and plus size clothes.
San Francisco-based Stitch Fix reported earnings per share of 4 cents in the first quarter, missing analyst expectations by a penny, according to FactSet. Revenue came to $295.6 million. Analysts expected $295 million.
The company's shares fell $2.76, or 11.1 percent, to $24.76 in after-hours trading. When Stitch Fix listed on the Nasdaq exchange in November, its initial public offering was priced at $15.
Stitch Fix reported a loss of $594,000 in the fiscal year that ended July 29, as its expenses rose. The year before it reported a profit of $33.2 million; in the same period, its revenue rose 34 percent, to $977.1 million.
Mail-order clothiers businesses can be more profitable than traditional retail because their ease of use can spark tremendous customer loyalty. Stitch Fix subscribers spend 30 percent of their online apparel "shopping wallet" with the service, according to NPD. For Trunk Club, that figure is 40 percent.
The potential for growth in the subscription-clothing sector is high, as more than half of apparel customers still haven't heard of such services, according to NPD research. And, since mail-order companies can avoid the expense of maintaining storefronts, they are somewhat insulated from the real-estate costs that have helped push many brick-and-mortar stores out of business this year.
Founded six years ago by Katrina Lake, who is the company's CEO, Stitch Fix focused first on clothing for women. But it has added men's clothing and added options like plus sizes and maternity clothes. The company said it uses human stylists and the data it collects from shoppers to pick out dresses, jeans or shirts the company thinks customers would buy.
