Stitch Fix Surprises With 1Q Profit; Shares Spike 34%

Shares of Stitch Fix jumped 33.6% in Monday’s extended trading session after the online personal styling service provider reported a surprise profit for 1Q and announced the hiring of a new CFO.

Don't Miss our Black Friday Offers:

Unlock your investing potential with TipRanks Premium - Now At 40% OFF!
Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter

Stitch Fix (SFIX) posted earnings of $0.09 per share for 1Q, while analysts were expecting a loss per share of $0.20. The bottom-line result also compared favourably with the year-ago quarter’s break-even earnings. Revenues increased 10% to $490.4 million year-on-year and beat the Street’s estimates of $481.2 million.

Stitch Fix CEO Katrina Lake said, “In Q1, we delivered $490 million in net revenue, reflecting 10% year-over-year growth, and grew our active client count to nearly 3.8 million, reflecting 10% year-over-year growth. This quarter we are proud to have achieved several multi-year highs, including our highest sequential client addition on record and the highest level of successful first Fixes in the past five years.” (See SFIX stock analysis on TipRanks)

In a separate press release, Stitch Fix announced that Dan Jedda of Amazon.com is joining the company as new CFO effective Dec. 9.

On Dec. 4, MKM Partners analyst Roxanne Meyer downgraded the stock to Sell from Hold citing increased compensation costs which could weigh on margins. However, Meyer said that her fundamental outlook on Stitch Fix has not changed. The analyst raised the stock’s price target to $28 (21.9% downside potential) from $25.

Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 9 Buys, 3 Holds and 3 Sells. The average price target stands at $33.29 and implies downside potential of about 7.1% to current levels. Shares have increased almost 40% year-to-date.