Stitch Fix, Inc. ( SFIX Quick Quote SFIX - Free Report) posted third-quarter fiscal 2023 results. SFIX reported a narrower-than-expected loss per share and better-than-expected revenues. The bottom line fared better year-over-year, while the top line deteriorated from the year-earlier quarter’s reported figure. Results were hurt by a tough macroeconomic backdrop and tighter consumer wallet. Following the quarterly results, Stitch Fix shares were up 7.1% after the trading session on Jun 6. Q3 Details
Stitch Fix posted a loss of 19 cents per share, which included restructuring costs and other one-time costs. Adjusting for the above-mentioned costs, Stitch Fix reported an adjusted loss of 17 cents per share, narrower than the Zacks Consensus Estimate of a loss of 32 cents. The metric narrowed from a loss of 72 cents per share reported in the year ago quarter.
SFIX recorded net revenues of $394.9 million, which outpaced the Zacks Consensus Estimate of $389 million. However, the metric declined 20% from the year-ago fiscal quarter’s figure due to lower net active clients. Margins & Costs
In the fiscal third quarter, gross profit declined to $167.9 million from $210.1 million reported in the year-ago period. Also, the gross margin contracted 10 basis points year over year to 42.5%, primarily due to lower revenues in the quarter.
The company’s cost of goods sold declined from $282.6 million reported in the year-ago period to $227 million in the fiscal third quarter. Selling, general and administrative expenses fell from $287 million in the prior-year quarter to $192.7 million in the quarter under review. Stitch Fix reported an adjusted EBITDA of $10.1 million for the fiscal quarter under review compared with the adjusted EBITDA loss of $36 million posted in the year-ago fiscal quarter. Other Financial Aspects
Stitch Fix ended the fiscal third quarter with cash and cash equivalents, including short-term investments of $243.7 million, net inventory of $151.6 million and shareholders’ equity of $253.8 million.
SFIX generated $25.7 million in cash from operating activities and had a free cash flow of $21.9 million during the third quarter of fiscal 2023. Outlook
For the fourth quarter of fiscal 2023, management projects net revenues of $365-$375 million, indicating a 22-24% decline from the year-ago fiscal quarter’s reported figure. This is due to challenges related to the tough macroeconomic backdrop. Stitch Fix expects adjusted EBITDA in the bracket of a break-even level to $10 million with a margin of 0% to 3%.
Management is persistently navigating the ongoing macroeconomic uncertainties and remains committed to improving gross margins with better product margins, transportation efficiency and inventory efficiency over time. For fiscal 2023, management anticipates a gross margin of approximately 42%. This Zacks Rank #3 (Hold) stock has rallied 28.1% in the past three months compared with industry’s growth of 4%. 3 Red-Hot Stocks
Some top-ranked stocks are
Tecnoglass ( TGLS Quick Quote TGLS - Free Report) , Skechers U.S.A., Inc. ( SKX Quick Quote SKX - Free Report) and Nomad Foods Limited ( NOMD Quick Quote NOMD - Free Report) , all of which sport a Zacks Rank #1 (Strong Buy). You can see . the complete list of today’s Zacks #1 Rank stocks here Tecnoglass manufactures and sells architectural glass and aluminum products for the residential and commercial construction industries. The Zacks Consensus Estimate for Tecnoglass’ current financial-year sales and earnings per share suggests growth of 18.1% and 23.8%, respectively, from the corresponding year-ago reported figures. TGLS has a trailing four-quarter earnings surprise of 22.7%, on average. Skechers is a worldwide producer and distributor of footwear for men, women and children. The Zacks Consensus Estimate for Skechers’ current financial-year sales suggests growth of 7.8%, while earnings per share are expected to rise by 31.9% from the corresponding year-ago reported figures. SKX has a trailing four-quarter earnings surprise of 18.8%, on average. Nomad Foods manufactures and distributes frozen foods. The company has a trailing four-quarter earnings surprise of 8.5%, on average. The Zacks Consensus Estimate for NOMD’s current financial year sales suggest growth of 8%, while earnings are likely to decline 3.4% from the prior-year reported numbers.