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Stitch Fix (SFIX) Q1 Loss Widens & Revenues Decrease Y/Y
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Stitch Fix, Inc. (SFIX - Free Report) posted dismal first-quarter fiscal 2023 results. SFIX reported a wider-than-expected loss per share and lower-than-expected revenues. Both metrics also deteriorated from the year-earlier quarter’s respective reported figures. Results were hurt by a tough macroeconomic backdrop.
Shares of this currently Zacks Rank #3 (Hold) company havedecreased 15.9% in the past six months compared with the industry’s 25% decline.
Q1 Details
Stitch Fix posted a loss of 50 cents a share, wider than the Zacks Consensus Estimate of a loss of 44 cents. The bottom line compared unfavorably with earnings of 2 cents a share recorded in the prior-year fiscal quarter.
SFIX recorded net revenues of $455.6 million, down 22% from the year-ago fiscal quarter’s figure due to weak fixed volumes, partly offset by demand in Freestyle. The metric came below the Zacks Consensus Estimate of $460 million.
Stitch Fix, Inc. Price, Consensus and EPS Surprise
Stitch Fix has active clients of 3,709,000 as of Oct 29, 2022, down 11% from the prior-year fiscal quarter’s level. Revenue per active client or RPAC reached $525, flat year over year.
Margins & Costs
In the fiscal first quarter, gross profit tumbled 29.7% to $191.8 million. Also, the gross margin contracted 490 basis points (bps) year over year to 42.1% mainly due to higher product costs, increased clearance and adverse transportation costs year over year.
Selling, general and administrative (SG&A) expenses fell 10.2% to $246.9 million. Stitch Fix reported an adjusted EBITDA loss of $7.4 million for the fiscal quarter under review against the adjusted EBITDA of $38.2 million posted in the year-ago fiscal quarter.
Other Financial Aspects
Stitch Fix ended the fiscal first quarter with cash and cash equivalents of $113.3 million minus debt and shareholders’ equity of $294.8 million.
SFIX used $10 million in cash from operating activities during the first quarter of fiscal 2023. Also, the company had a negative free cash flow of $16.2 million in the aforementioned period.
Outlook
For the second quarter of fiscal 2023, management projects net revenues of $410-$420 million, indicating a 19-21% decline from the year-ago fiscal quarter’s reported figure. This is due to continued pressure on net active clients and the promotional holiday period. Stitch Fix expects adjusted EBITDA in the bracket of a negative $5 million to a positive $5 million with a margin of minus 1% to plus 1%.
For fiscal 2023, management projects revenues between $1.6 billion and $1.7 billion, and adjusted EBITDA in the bracket of a negative $10 million to a positive $10 million. Management anticipates a gross margin of 42% for fiscal 2023. It expects advertising as a rate of revenue to be lower than the historic rate owing to the marketing shift. For the rest of the fiscal year, advertising is likely to be approximately 5-6% of revenues.
The Zacks Consensus Estimate for Crocs’ current financial-year sales and EPS suggests growth of 51.5% and 23.7%, respectively, from the year-ago period. CROX has a trailing four-quarter earnings surprise of 18.2%, on average.
Arhaus (ARHS - Free Report) , a lifestyle brand and premium retailer in the home furnishing market, currently carries a Zacks Rank of 2. The expected EPS growth rate for three to five years is 14.3%.
The Zacks Consensus Estimate for Arhaus’ current financial-year revenues and EPS suggests growth of 49.1% and 21.7%, respectively, from the year-ago reported figure. Arhaus has a trailing four-quarter earnings surprise of 112%, on average.
Chipotle Mexican Grill (CMG - Free Report) , an operator of fast-casual restaurants, currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 23.4%.
The Zacks Consensus Estimate for Chipotle Mexican Grill’s current financial-year revenues and EPS suggests growth of 15.1% and 31%, respectively, from the year-ago reported figure. CMG has a trailing four-quarter earnings surprise of 4.1%, on average.
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Stitch Fix (SFIX) Q1 Loss Widens & Revenues Decrease Y/Y
Stitch Fix, Inc. (SFIX - Free Report) posted dismal first-quarter fiscal 2023 results. SFIX reported a wider-than-expected loss per share and lower-than-expected revenues. Both metrics also deteriorated from the year-earlier quarter’s respective reported figures. Results were hurt by a tough macroeconomic backdrop.
Shares of this currently Zacks Rank #3 (Hold) company havedecreased 15.9% in the past six months compared with the industry’s 25% decline.
Q1 Details
Stitch Fix posted a loss of 50 cents a share, wider than the Zacks Consensus Estimate of a loss of 44 cents. The bottom line compared unfavorably with earnings of 2 cents a share recorded in the prior-year fiscal quarter.
SFIX recorded net revenues of $455.6 million, down 22% from the year-ago fiscal quarter’s figure due to weak fixed volumes, partly offset by demand in Freestyle. The metric came below the Zacks Consensus Estimate of $460 million.
Stitch Fix, Inc. Price, Consensus and EPS Surprise
Stitch Fix, Inc. price-consensus-eps-surprise-chart | Stitch Fix, Inc. Quote
Stitch Fix has active clients of 3,709,000 as of Oct 29, 2022, down 11% from the prior-year fiscal quarter’s level. Revenue per active client or RPAC reached $525, flat year over year.
Margins & Costs
In the fiscal first quarter, gross profit tumbled 29.7% to $191.8 million. Also, the gross margin contracted 490 basis points (bps) year over year to 42.1% mainly due to higher product costs, increased clearance and adverse transportation costs year over year.
Selling, general and administrative (SG&A) expenses fell 10.2% to $246.9 million. Stitch Fix reported an adjusted EBITDA loss of $7.4 million for the fiscal quarter under review against the adjusted EBITDA of $38.2 million posted in the year-ago fiscal quarter.
Other Financial Aspects
Stitch Fix ended the fiscal first quarter with cash and cash equivalents of $113.3 million minus debt and shareholders’ equity of $294.8 million.
SFIX used $10 million in cash from operating activities during the first quarter of fiscal 2023. Also, the company had a negative free cash flow of $16.2 million in the aforementioned period.
Outlook
For the second quarter of fiscal 2023, management projects net revenues of $410-$420 million, indicating a 19-21% decline from the year-ago fiscal quarter’s reported figure. This is due to continued pressure on net active clients and the promotional holiday period. Stitch Fix expects adjusted EBITDA in the bracket of a negative $5 million to a positive $5 million with a margin of minus 1% to plus 1%.
For fiscal 2023, management projects revenues between $1.6 billion and $1.7 billion, and adjusted EBITDA in the bracket of a negative $10 million to a positive $10 million. Management anticipates a gross margin of 42% for fiscal 2023. It expects advertising as a rate of revenue to be lower than the historic rate owing to the marketing shift. For the rest of the fiscal year, advertising is likely to be approximately 5-6% of revenues.
Key Picks in Retail
Crocs (CROX - Free Report) , a leader in innovative casual footwear for women, men and children, currently carries a Zacks Rank #2 (Buy). CROX has an expected EPS growth rate of 15% for three to five years. You can see the complete list of today’s Zacks #1(Strong Buy) Rank stocks here.
The Zacks Consensus Estimate for Crocs’ current financial-year sales and EPS suggests growth of 51.5% and 23.7%, respectively, from the year-ago period. CROX has a trailing four-quarter earnings surprise of 18.2%, on average.
Arhaus (ARHS - Free Report) , a lifestyle brand and premium retailer in the home furnishing market, currently carries a Zacks Rank of 2. The expected EPS growth rate for three to five years is 14.3%.
The Zacks Consensus Estimate for Arhaus’ current financial-year revenues and EPS suggests growth of 49.1% and 21.7%, respectively, from the year-ago reported figure. Arhaus has a trailing four-quarter earnings surprise of 112%, on average.
Chipotle Mexican Grill (CMG - Free Report) , an operator of fast-casual restaurants, currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 23.4%.
The Zacks Consensus Estimate for Chipotle Mexican Grill’s current financial-year revenues and EPS suggests growth of 15.1% and 31%, respectively, from the year-ago reported figure. CMG has a trailing four-quarter earnings surprise of 4.1%, on average.