Stitch Fix Delivers Surprise Q4 EPS Beat; Shares Leap 17%

Stitch Fix, Inc. (SFIX) shares jumped almost 17% in Tuesday’s extended trading session after the company delivered blowout fourth-quarter results.

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Shares of the online personal shopping and styling service company, with a current market capitalization of $3.8 billion, have gained 34% over the past year. (See Stitch Fix stock charts on TipRanks)

The quarterly beat was driven by robust performances across all the business segments, especially Women’s Fix, impressive growth in Kids and the U.K., and continued momentum in the Freestyle channel.

Markedly, adjusted earnings of $0.19 per share massively beat analysts’ expectations of a loss of $0.13 per share and improved significantly compared to a loss of $0.44 reported in the prior-year period.

Further, revenues jumped 29% year-over-year to $571.2 million and exceeded consensus estimates of $547.89 million. Notably, the company exceeded the $2 billion mark in annual revenues for the first time.

The increase in revenues reflected 18% growth in active clients to 4.165 million and revenue per active client that crossed the $500 benchmark for the first time.

Stitch Fix CEO Elizabeth Spaulding commented, “Today, we are proud to serve almost 4.2 million clients, and with the launch of Stitch Fix Freestyle in August we are significantly increasing our addressable market and we’re energized by the opportunity ahead.”

She further added, “As we look forward, we are focused on continuing to expand and transform our offering, and drive awareness of Stitch Fix as the destination for personalized shopping, styling and inspiration, leveraging our unique combination of data science, and creative human judgement.”

Stitch Fix Provides Q1 and FY2022 Outlook

Based on strong Q4 results, the company initiated guidance for the first quarter and the full year of Fiscal 2022.

The company forecasts first-quarter revenues to grow 14% to 17% year-over-year to between $560 and $575 million, while the consensus estimate is pegged at $591 million. Further, adjusted EBITDA is expected to be around $15 – $20 million.

For the full year, revenues are projected to grow more than 15% year-over-year, with an expected adjusted margin of greater than 2%.

Stitch Fix Unveils Stitch Fix Freestyle

Concurrent with the earnings announcement, Stitch Fix launched Stitch Fix Freestyle, a highly curated and personal shopping experience where customers can discover and instantly buy items customized for them based on their individual style preferences, profile inputs, size, and fit.

This will enable anyone to buy items directly from Stitch Fix without ordering a Fix first. Further, it will offer a comprehensive range of styles across casual, workwear, occasion, active, athleisure, loungewear, and sleepwear, to name a few.

J.P. Morgan analyst Cory Carpenter recently decreased the price target on Stitch Fix from $52 to $45 (26.9% upside potential) and reiterated a Hold rating.

Overall, the stock has a Moderate Sell consensus rating based on 1 Hold and 2 Sells. The average Stitch Fix price target of $37 implies 4.3% upside potential from current levels.