Stitch Fix Inc (NASDAQ:SFIX) stock surges 30.84% (As on June 7, 11:07:28 AM UTC-4, Source: Google Finance) after the company posted better than expected results for the third quarter of FY 23. Active clients of 3,476,000, a decrease of 431,000 or 11% year over year. Net revenue per active client (RPAC) of $502, a decrease of 9% year over year. The company reported net loss of $21.8 million and Adjusted EBITDA of $10.1 million. The company generated positive free cash flow this quarter, delivering $21.9 million and ended the quarter with $244 million of cash and investments, and no bank debt.
SFIX in the third quarter of FY 23 has reported the adjusted loss per share of 17 cents, beating the analysts’ estimates for the adjusted loss per share of 32 cents, according to the Zacks Consensus Estimate. The company had reported 20 percent fall in the adjusted revenue to $394.91 million in the third quarter of FY 23, beating the analysts’ estimates for revenue by 1.39%.
Furthermore, in the third quarter, the company has identified an opportunity to optimize their operations while enhancing the client experience. By moving to a three distribution center network, from the current five distribution center network, the company will have greater depth and breadth of inventory available for our stylists to serve clients. Therefore, the company will not be renewing the lease on the Bethlehem distribution center when it expires later this year and also plan to close the Dallas distribution center next calendar year. In addition to a strategic refocusing on the styling first business in the US, and despite ongoing efforts to control costs and increase efficiencies across the company, the company has concluded the need to explore exiting the UK market in FY24.
For its current financial quarter, Stitch Fix expects up to $375 million in sales versus analysts at $379 million. Q4 Adjusted EBITDA is expected to be in the range of $0 million – $10 million
On the other hand, Stitch Fix has been using artificial intelligence since before it was cool—years before the onset of the AI fever dream sweeping retail today. The styling service uses various forms of AI, including natural language processing, to not only personalize recommendations, but to make seasonal forecasts, assign warehouses for fulfillment, and inform purchasing decisions, to name just a few. It’s this top-to-bottom approach to AI that Chief Technology Officer Sachin Dhawan says sets Stitch Fix apart from the rest of the retail industry.