Stitch Fix, Inc. ( SFIX Quick Quote SFIX - Free Report) posted a narrower-than-expected loss per share and better-than-expected revenues in its fourth-quarter fiscal 2023 results. While the bottom line fared better year over year, the top line deteriorated from the year-earlier quarter figure. Results were hurt by a tough macroeconomic backdrop and a tighter consumer wallet. Stitch Fix shares declined 5.6% after the trading session on Sep 18. Q4 Details
Stitch Fix posted a loss of 24 cents per share, which included restructuring costs and other one-time costs. Adjusting for the above-mentioned costs, the company reported an adjusted loss of 19 cents per share, narrower than the Zacks Consensus Estimate of a loss of 22 cents. The metric narrowed from a loss of 65 cents per share reported in the year-ago quarter.
SFIX recorded net revenues of $375.8 million, which outpaced the Zacks Consensus Estimate of $372 million. However, the metric declined 22% from the year-ago quarter figure due to lower net active clients. For fiscal 2023, Freestyle revenues declined 21% year over year to $1,638.4 million. For the fiscal year, it posted a loss of $1.50 per share, which included restructuring costs and other one-time costs. Margins & Costs
In the fiscal fourth quarter, gross profit declined to $162.7 million from $192.7 million reported in the year-ago period. However, the gross margin expanded 330 basis points (bps) year over year to 43.3% as the company continued its efforts to align its inventory position with the demand environment. We expected the figure to expand by 220 bps to 42.2% for the quarter under review.
The company’s cost of goods sold declined from $289.2 million reported in the year-ago period to $213.1 million in the fiscal fourth quarter. Selling, general and administrative expenses (SG&A) fell from $291.3 million in the prior-year quarter to $194 million in the quarter under review. SG&A expenses, as a percentage of net revenues, were 51.6%, down 880 bps from 60.4% reported in the prior-year quarter. We expected the metric to decline by 1,080 bps to 49.6% for the quarter. Stitch Fix reported an adjusted EBITDA of $10.4 million for the fiscal quarter under review compared with the adjusted EBITDA loss of $31.8 million posted in the year-ago fiscal quarter. Other Financial Aspects
The company ended the fiscal fourth quarter with cash and cash equivalents of $239.4 million, short-term investments of $18.2 million, net inventory of $137.2 million and shareholders’ equity of $247.3 million.
SFIX generated $21.1 million in cash from operating activities and had a free cash flow of $17.7 million during the fourth quarter of fiscal 2023. Outlook
For the first quarter of fiscal 2024, management projects net revenues of $355-$365 million, indicating an 18-20% 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 band of $2-$7 million, with a margin of 1% to 2%.
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 both first-quarter fiscal 2024 and fiscal 2024, management anticipates a gross margin of 43-44%. For fiscal 2024, SFIX projects net revenues of $1.30-$1.37 billion, indicating a 14-18% decline from the year-ago fiscal quarter’s reported figure. For the fiscal year, Stitch Fix expects adjusted EBITDA in the range of $5-$30 million with a margin of 0% to 2%.
This Zacks Rank #3 (Hold) stock has lost 18.2% in the past three months against the
industry’s growth of 3.5%. Key Picks
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