Stitch Fix Inc (NASDAQ: SFIX) stock fell over 14.5% in the pre-market session of 2nd October, 2019 (as of 9:23 am GMT-4; Source: Google finance). The forecast current-quarter revenue was below analysts’ estimates as it cut marketing spending and increased technology investment. Stitch Fix has also made its first overseas foray into the UK earlier this year, and has broadened its product categories to include kids, maternity wear, and petite and plus sizes. Q4 adjusted EBITDA was $6.4 million or 1.5% of net revenue and Q4 net income was $7.2 million.
SFIX in the fourth quarter of FY 19 has reported the adjusted earnings per share of 7 cents, beating the analysts’ estimates for the adjusted earnings per share of 3 cents. The company had reported the adjusted revenue growth of 36 percent to $432.1 million in the fourth quarter of FY 19, slightly missing the analysts’ estimates for revenue of $432.3 million. The active clients grew by 18% to 3.2 million, broadly in line with the expectation of 3.23 million clients, according to analyst polled by FactSet Research. SFIX grew net revenue per active client by 9% year-over-year.
Moreover, Q4 gross margin was above the company’s expectations at 44.1% This however reflects a 30 basis point decline from last year, due to an increase in inventory reserve as the company invested in inventory year-over-year.
The company expects to post revenue in the range of $438 million and $442 million in the first quarter, which is much lower than $451 million forecast by analysts, according to IBES data from Refinitiv. First-quarter revenue would also be affected by its summer assortment like t-shirts and sleeveless tops, as clients spend fewer dollars on these products. Q1 EBITDA is expected to be in the range of negative $7 million to negative $4 million. This includes SBC costs of $13 million, as well as planned investments in marketing and the U.K, resulting in adjusted EBITDA excluding SBC in the range of $6 million to $9 million.
The company forecast full-year revenue to be in the range of $1.90 billion and $1.93 billion, while the analysts are expecting $1.92 billion. SFIX expects EBITDA to be in the range of $10 million to $30 million. Besides investments across operations, this forecast includes stock-based compensation or SBC of $75 million, as the company plan to invest aggressively in the data science engineering teams to advance the personalization capabilities, including direct buy.