Stitch Fix Plunges 16% On Larger 4Q Loss; Street Is Bullish

Stitch Fix shares dropped more than 16% in the extended market session on Tuesday after the apparel and accessories retailer reported a larger-than-expected 4Q loss of $0.44 per share versus analysts’ loss expectations of $0.16. The company posted a profit of $0.07 per share in the year-ago quarter.

Meanwhile, Stitch’s (SFIX) revenues rose 11% year-over-year to $443.4 million and came above the Street consensus of $415.2 million. Stitch’s number of active clients grew 9% year-over-year to 3.5 million in the fourth quarter ending Aug 1.

Stitch’s President Elizabeth Spaulding said “We’re particularly excited by the momentum of our direct buy offering. It’s still early days, but the ability to shop personalized items and outfits in our feed-based experience is clearly resonating with our clients.” 

Stitch Fix’s CEO Katrina Lake that she is excited to bring “personalized shopping experience to even more consumers as they transition to a future of online shopping.” (See SFIX stock analysis on TipRanks).

On Sept. 21, Robert W. Baird analyst Mark Altschwagger anticipated Stitch to report solid 4Q results given its easing supply disruption, Direct Buy expansion, and the consumer’s shift to online spending acceleration. The analyst maintained a Buy rating and a price target of $30 (4.4% downside potential) the stock saying that the company will need to give a positive outlook to propel the stock higher as expectations are already high.

Currently, the Street has a bullish outlook on the stock. The Strong Buy analyst consensus is based on 7 Buys and 2 Holds. The average price target of $31 implies downside potential of about 1.2% to current levels. Shares have increased 22.3% year-to-date.

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