Stitch Fix, Inc. (SFIX - Free Report) reported fourth-quarter fiscal 2019 results, wherein the bottom line surpassed the Zacks Consensus Estimate, while revenues came in line. Despite earnings beat, shares of this San Francisco, CL-based company failed to buoy investor optimism. We note that the stock plunged 10.8% on Oct 2, and is trading close to its 52-week low of $16.05.
The dismal run on the bourses can be attributed to management’s soft view for the first quarter and fiscal 2020. Further, the bottom line declined year over year.
Management now envisions first-quarter revenues in the band of $438-$442 million, indicating an improvement of 20-21% from the year-ago quarter. Meanwhile, the Zacks Consensus Estimate for the same is pegged at $451.3 million, higher than the guided range.
Moving on, fiscal 2020 revenues are estimated in the range of $1.9-$1.93 billion, suggesting year-over-year growth of 20.5-22.5%. However, the mid-point ($1.915 billion) of the projected range is marginally below the Zacks Consensus Estimate of $1.92 billion.
Meanwhile, this Zacks Rank #3 (Hold) stock has plunged 42.1% in the past three months compared with the industry’s decline of 12.2%.
Q4 Highlights
In the quarter under review, Stitch Fix’s adjusted earnings came in at 7 cents per share, which exceeded the Zacks Consensus Estimate of 4 cents. However, the bottom line decreased 58.8% from the prior-year period figure of 17 cents.
Notably, net revenues grew 36% to $432.1 million, which matched the Zacks Consensus Estimate. This marks the eighth successive quarter of revenue growth over 25% for the company. The uptick was driven by growth in Women’s, Men’s and Kids categories. Further, active client improved 18% to 3.2 million, while revenue per client increased 9% year over year on the back of robust performance in women’s category.
Gross profit increased 34.6% year over year to $190.4 million, however, gross margin contracted roughly 30 basis points to 44.1% owing to higher inventory level. Meanwhile, operating income fell to $1.8 million from $8.1 million reported in the year-ago period. Operating margin contracted 210 bps to 0.4% compared with 2.5% reported in the year-ago quarter.
Adjusted EBITDA came in at $6.4 million, down 42.4% from $11.1 million in the year-ago quarter. Moreover, SG&A improved 41.5% to $188.6 million in the quarter under review.
Other Financial Aspects
Stitch Fix ended the quarter with cash and cash equivalents of $170.9 million, long-term investments $53.4 million and total shareholders’ equity of $396 million. Cash flow from operations amounted to $78.6 million in fiscal 2019. The company generated free cash flow $47.8 million during the fiscal year.
Stitch Fix, Inc. Price, Consensus and EPS Surprise
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Canada Goose Holdings (GOOS - Free Report) has a long-term earnings growth rate of 28.5% and a Zacks Rank #2 (Buy).
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Stitch Fix, Inc. (SFIX - Free Report) reported fourth-quarter fiscal 2019 results, wherein the bottom line surpassed the Zacks Consensus Estimate, while revenues came in line. Despite earnings beat, shares of this San Francisco, CL-based company failed to buoy investor optimism. We note that the stock plunged 10.8% on Oct 2, and is trading close to its 52-week low of $16.05.
The dismal run on the bourses can be attributed to management’s soft view for the first quarter and fiscal 2020. Further, the bottom line declined year over year.
Management now envisions first-quarter revenues in the band of $438-$442 million, indicating an improvement of 20-21% from the year-ago quarter. Meanwhile, the Zacks Consensus Estimate for the same is pegged at $451.3 million, higher than the guided range.
Moving on, fiscal 2020 revenues are estimated in the range of $1.9-$1.93 billion, suggesting year-over-year growth of 20.5-22.5%. However, the mid-point ($1.915 billion) of the projected range is marginally below the Zacks Consensus Estimate of $1.92 billion.
Meanwhile, this Zacks Rank #3 (Hold) stock has plunged 42.1% in the past three months compared with the industry’s decline of 12.2%.
Q4 Highlights
In the quarter under review, Stitch Fix’s adjusted earnings came in at 7 cents per share, which exceeded the Zacks Consensus Estimate of 4 cents. However, the bottom line decreased 58.8% from the prior-year period figure of 17 cents.
Notably, net revenues grew 36% to $432.1 million, which matched the Zacks Consensus Estimate. This marks the eighth successive quarter of revenue growth over 25% for the company. The uptick was driven by growth in Women’s, Men’s and Kids categories. Further, active client improved 18% to 3.2 million, while revenue per client increased 9% year over year on the back of robust performance in women’s category.
Gross profit increased 34.6% year over year to $190.4 million, however, gross margin contracted roughly 30 basis points to 44.1% owing to higher inventory level. Meanwhile, operating income fell to $1.8 million from $8.1 million reported in the year-ago period. Operating margin contracted 210 bps to 0.4% compared with 2.5% reported in the year-ago quarter.
Adjusted EBITDA came in at $6.4 million, down 42.4% from $11.1 million in the year-ago quarter. Moreover, SG&A improved 41.5% to $188.6 million in the quarter under review.
Other Financial Aspects
Stitch Fix ended the quarter with cash and cash equivalents of $170.9 million, long-term investments $53.4 million and total shareholders’ equity of $396 million. Cash flow from operations amounted to $78.6 million in fiscal 2019. The company generated free cash flow $47.8 million during the fiscal year.
Stitch Fix, Inc. Price, Consensus and EPS Surprise
Interested in Retail? 3 Stocks You Can’t Miss
Zumiez (ZUMZ - Free Report) has a long-term earnings growth rate of 12% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Guess (GES - Free Report) has a long-term earnings growth rate of 17.5% and a Zacks Rank #1.
Canada Goose Holdings (GOOS - Free Report) has a long-term earnings growth rate of 28.5% and a Zacks Rank #2 (Buy).
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 7 stocks to watch. The report is only available for a limited time.
See 7 breakthrough stocks now>>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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