Stitch Fix Inc (NASDAQ:SFIX) stock plunges 35.60% (As on September 25, 11:18:10 AM UTC-4, Source: Google Finance) after the company reported a wider-than-expected loss for its fiscal fourth quarter and issued disappointing guidance. The company have $247 million of cash, cash equivalents, and investments with no debt. SFIX is executing the transformation strategy, which includes three distinct phases: a rationalization phase, a build phase, and a growth phase. As part of this, the company has exited the U.K., closed two fulfillment centers, rightsized the corporate head count and continued the cost discipline management. These actions, among others, resulted in over $100 million of SG&A savings in FY ’24. The company is continuing to invest in AI and data science. SFIX has ended the year with approximately 2,508,000 active clients, a decrease of 20% year over year.

SFIX in the fourth quarter of FY 24 has reported the adjusted loss per share of 29 cents, missing the analysts’ estimates for the adjusted loss per share of 20 cents. The company had reported the adjusted revenue decline of 12.4 percent to $319.6 million in the fourth quarter of FY 24, beating the analysts’ estimates for revenue of $318.48 million. Revenue per active client grew year over year for the second quarter in a row to $533, up 5% year over year and up 2% quarter over quarter. Fixed AOV, which helped drive RPAC improvement for the quarter, was up year over year for the fourth quarter in a row, driven mostly by keep rate. Q4 gross margin came in at 44.6%, up 50 basis points year over year and down 90 basis points quarter over quarter. The quarter-over-quarter decrease was driven mainly by reduced merchandise margins related to summer promotional activity. Advertising was 9% of net revenue in Q4, up 210 basis points year over year and up 10 basis points quarter over quarter. Q4 adjusted EBITDA was $9.5 million or approximately 3% margin, down 60 basis points year over year or up 90 basis points quarter over quarter.

Stitch Fix’s outlook also fell short of expectations. For the first quarter of fiscal 2025, the company forecast revenue between $303 million and $310 million, well below analyst projections of $331.3 million.  The company expects Q1 adjusted EBITDA to be between $5 million and $9 million. The company expects both Q1 and full year gross margin to be approximately 44% to 45%.