Stitch Fix Inc (NASDAQ:SFIX) stock fell 13.08% (As on Mar 9, 11:25:03 AM UTC-4, Source: Google Finance) after the company offered a weak outlook for its fiscal third quarter and slashed its forecast for the full year. Stitch Fix reported a net loss of $30.9 million compared with a loss of $21 million, a year earlier. Active clients were of 4,019,000, an increase of 146,000 or 4% year over year. Net revenue per active client (RPAC) were of $549, an increase of 18% year over year. Further, the company observed positive trends in client engagement with RPAC reaching a record high for the third quarter in a row, up 18% from a year ago – a result of higher average order values in our Fix business and the incrementality that Freestyle provides to the existing client base. While Freestyle revenue grew 29% year-over-year, we are observing challenges with onboarding and conversion of clients and are beginning to direct new clients to a clear and easy Fix onboarding path.
Meanwhile, Stitch Fix’s business is also run entirely online, which means the company doesn’t have a way to connect with consumers in a physical way. That was seen as a bright spot during the thick of the Covid pandemic, as spending shifted online, but now Stitch Fix is facing heightened transportation expenses and also must deal with mailed returns of unwanted items.
SFIX in the second quarter of FY 22 has reported the adjusted loss per share of 28 cents, which is inline with the analysts’ estimates for the adjusted loss per share of 28 cents, based on a survey of analysts by Refinitiv. The company had reported the adjusted revenue growth of 3 percent to $516.7 million in the second quarter of FY 22, beating the analysts’ estimates for revenue of $514.8 million.
For its third quarter, Stitch Fix expects net revenue to be between $485 million and $500 million, which would represent a decline of 10% to 7% from the prior year. Analysts had been looking for sales of $560.5 million. Q3 Adjusted EBITDA is expected to be in the range of $(30) million – $(25) million
For its fiscal year, which ends July 30, Stitch Fix sees revenue flat to slightly down year over year, assuming that the number of active clients is flat through the end of the 12-month period. Analysts had expected revenue to be up 8.1% for the year.