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Why Is Stitch Fix (SFIX) Down 9.1% Since Last Earnings Report?
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It has been about a month since the last earnings report for Stitch Fix (SFIX - Free Report) . Shares have lost about 9.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Stitch Fix due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Stitch Fix Loss Narrows in Q1, Revenues Down Y/Y
Stitch Fix posted a narrower-than-expected loss per share and better-than-expected revenues in its first-quarter fiscal 2024 results. While the bottom line fared better year over year, the top line deteriorated from the year-earlier quarter’s figure. The results were hurt by a tough macroeconomic backdrop and a tighter consumer wallet.
Q1 Details
Stitch Fix reported an adjusted loss of 22 cents per share, narrower than the Zacks Consensus Estimate of a loss of 23 cents. The metric also narrowed from a loss of 46 cents per share reported in the year-ago quarter.
Stitch Fix recorded net revenues of $364.8 million, which outpaced the Zacks Consensus Estimate of $362 million. However, the metric declined 18% from the year-ago quarter figure due to lower net active clients.
Margins & Costs
In the fiscal first quarter, gross profit declined to $159.1 million from $187.3 million reported in the year-ago period. However, the gross margin expanded 140 basis points (bps) year over year to 43.6%, supported by improvements in Stitch Fix’s inventory position and transportation leverage.
The company’s cost of goods sold declined from $256.4 million reported in the year-ago period to $205.7 million in the fiscal first quarter. Selling, general and administrative expenses (“SG&A”) fell from $235.8 million in the prior-year quarter to $187.8 million in the quarter under review. SG&A expenses, as a percentage of net revenues, were 51.5%, down 160 bps from 53.1% reported in the prior-year quarter.
Stitch Fix reported an adjusted EBITDA of $8.6 million for the fiscal quarter under review compared with the adjusted EBITDA loss of $1.7 million posted in the year-ago fiscal quarter.
Other Financial Aspects
The company ended the fiscal first quarter with cash and cash equivalents of $256.9 million, short-term investments of $5.4 million, net inventory of $160.7 million and shareholders’ equity of $230.7 million. Stitch Fix generated $20.6 million in cash from operating activities and had a free cash flow of $16.9 million during the first quarter of fiscal 2024.
Outlook
For the second quarter of fiscal 2024, management projects net revenues of $325-$335 million, indicating a 16-19% decline from the year-ago quarter’s reported figure. This decline is expected to occur from challenges related to the tough macroeconomic backdrop. Stitch Fix expects adjusted EBITDA of $2-$7 million, with a margin of 1% to 2%.
Management is persistently navigating the ongoing macroeconomic uncertainties. It is committed to improving gross margins with better product margins, transportation efficiency and inventory efficiency over time. For both second-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 quarter’s reported figure. For the fiscal year, Stitch Fix expects an adjusted EBITDA of $10-$30 million, with a margin of 1-2%, compared with an adjusted EBITDA of $5-$30 million and a margin of 0-2% mentioned earlier.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 14.69% due to these changes.
VGM Scores
At this time, Stitch Fix has a great Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Stitch Fix has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Stitch Fix is part of the Zacks Retail - Apparel and Shoes industry. Over the past month, Foot Locker (FL - Free Report) , a stock from the same industry, has gained 3%. The company reported its results for the quarter ended October 2023 more than a month ago.
Foot Locker reported revenues of $1.99 billion in the last reported quarter, representing a year-over-year change of -8.5%. EPS of $0.30 for the same period compares with $1.27 a year ago.
Foot Locker is expected to post earnings of $0.30 per share for the current quarter, representing a year-over-year change of -69.1%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.8%.
Foot Locker has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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Why Is Stitch Fix (SFIX) Down 9.1% Since Last Earnings Report?
It has been about a month since the last earnings report for Stitch Fix (SFIX - Free Report) . Shares have lost about 9.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Stitch Fix due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Stitch Fix Loss Narrows in Q1, Revenues Down Y/Y
Stitch Fix posted a narrower-than-expected loss per share and better-than-expected revenues in its first-quarter fiscal 2024 results. While the bottom line fared better year over year, the top line deteriorated from the year-earlier quarter’s figure. The results were hurt by a tough macroeconomic backdrop and a tighter consumer wallet.
Q1 Details
Stitch Fix reported an adjusted loss of 22 cents per share, narrower than the Zacks Consensus Estimate of a loss of 23 cents. The metric also narrowed from a loss of 46 cents per share reported in the year-ago quarter.
Stitch Fix recorded net revenues of $364.8 million, which outpaced the Zacks Consensus Estimate of $362 million. However, the metric declined 18% from the year-ago quarter figure due to lower net active clients.
Margins & Costs
In the fiscal first quarter, gross profit declined to $159.1 million from $187.3 million reported in the year-ago period. However, the gross margin expanded 140 basis points (bps) year over year to 43.6%, supported by improvements in Stitch Fix’s inventory position and transportation leverage.
The company’s cost of goods sold declined from $256.4 million reported in the year-ago period to $205.7 million in the fiscal first quarter. Selling, general and administrative expenses (“SG&A”) fell from $235.8 million in the prior-year quarter to $187.8 million in the quarter under review. SG&A expenses, as a percentage of net revenues, were 51.5%, down 160 bps from 53.1% reported in the prior-year quarter.
Stitch Fix reported an adjusted EBITDA of $8.6 million for the fiscal quarter under review compared with the adjusted EBITDA loss of $1.7 million posted in the year-ago fiscal quarter.
Other Financial Aspects
The company ended the fiscal first quarter with cash and cash equivalents of $256.9 million, short-term investments of $5.4 million, net inventory of $160.7 million and shareholders’ equity of $230.7 million. Stitch Fix generated $20.6 million in cash from operating activities and had a free cash flow of $16.9 million during the first quarter of fiscal 2024.
Outlook
For the second quarter of fiscal 2024, management projects net revenues of $325-$335 million, indicating a 16-19% decline from the year-ago quarter’s reported figure. This decline is expected to occur from challenges related to the tough macroeconomic backdrop. Stitch Fix expects adjusted EBITDA of $2-$7 million, with a margin of 1% to 2%.
Management is persistently navigating the ongoing macroeconomic uncertainties. It is committed to improving gross margins with better product margins, transportation efficiency and inventory efficiency over time. For both second-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 quarter’s reported figure. For the fiscal year, Stitch Fix expects an adjusted EBITDA of $10-$30 million, with a margin of 1-2%, compared with an adjusted EBITDA of $5-$30 million and a margin of 0-2% mentioned earlier.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 14.69% due to these changes.
VGM Scores
At this time, Stitch Fix has a great Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Stitch Fix has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Stitch Fix is part of the Zacks Retail - Apparel and Shoes industry. Over the past month, Foot Locker (FL - Free Report) , a stock from the same industry, has gained 3%. The company reported its results for the quarter ended October 2023 more than a month ago.
Foot Locker reported revenues of $1.99 billion in the last reported quarter, representing a year-over-year change of -8.5%. EPS of $0.30 for the same period compares with $1.27 a year ago.
Foot Locker is expected to post earnings of $0.30 per share for the current quarter, representing a year-over-year change of -69.1%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.8%.
Foot Locker has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.