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Stitch Fix (SFIX)
NASDAQ:SFIX
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Stitch Fix
(NASDAQ:SFIX)
51Neutral
Positive Factors
Earnings
Stitch Fix's fiscal Q1 results came in ahead of expectations, with active customers slightly ahead of consensus, while revenue and adj. EBITDA were both solidly above.
Operational Improvements
Gross Margins Expand on Efficiencies. Q1 gross margin reached 45.4%, an increase of +180 bps vs. the prior-year period.
Negative Factors
Customer Base
Stitch Fix's total active customers declined by 74K, and net revenue declined ~13% year-over-year.
Stitch Fix (SFIX) vs. S&P 500 (SPY)
Market Cap
$536.55M
Dividend YieldN/A
Average Volume (3M)2.12M
Price to Earnings (P/E)―
Beta (1Y)2.11
Revenue Growth-16.55%
EPS Growth37.65%
CountryUS
Employees4,570
SectorConsumer Cyclical
Sector Strength49
IndustryRetail - Discretionary
Share Statistics
EPS (TTM)-0.82
Shares Outstanding104,524,760
10 Day Avg. Volume2,562,651
30 Day Avg. Volume2,115,164
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.41
Price to Cash Flow (P/CF)9.20
P/FCF Ratio13.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$4.75Price Target Upside12.29% Upside
Rating ConsensusHold
Number of Analyst Covering5
Stitch Fix Business Overview & Revenue Model
Company DescriptionStitch Fix, Inc. is an online personal styling service that delivers personalized Fixes of apparel and accessories to men, women and kids. The company was founded by Katrina Lake and Erin Morrison Flynn in February 2011 and is headquartered in San Francisco, CA.
How the Company Makes MoneyStitch Fix generates revenue primarily through the sale of clothing and accessories that are sent to clients. The company operates on a subscription-free model, where customers pay a styling fee for each curated 'Fix' delivery, which can be applied as a credit towards any items they choose to purchase. Stitch Fix also earns revenue through direct purchases from its online shop, where clients can buy items without receiving a curated box. The company's earnings are further supported by its proprietary algorithms and data analytics, which enhance customer satisfaction and increase purchase rates by improving the accuracy of personalized recommendations. Additionally, partnerships with various clothing and accessory brands enable Stitch Fix to offer a wide range of products, contributing to its revenue streams.
Stitch Fix Financial Statement Overview
Summary
Stitch Fix faces significant financial challenges, with declining revenues, consistent losses, and operational inefficiencies. While the balance sheet shows moderate leverage, declining equity raises concerns about financial stability. Cash flow management shows some resilience in operational cash flow generation, but volatile free cash flows indicate potential liquidity risks.Income Statement
Stitch Fix's revenue has been declining over recent years, with a negative revenue growth rate observed. The company also shows negative EBIT and EBITDA margins, indicating operational challenges and inefficiencies. The net profit margin is also negative, highlighting profitability concerns. Overall, the income statement reflects significant struggles in achieving profitability and growing revenue.45
Neutral
Balance Sheet
The debt-to-equity ratio suggests moderate leverage, but the declining stockholders' equity over time raises potential concerns about financial stability. The return on equity is negative due to consistent net losses, impacting investor returns. However, a reasonable equity ratio indicates that a substantial portion of the company's assets is financed by equity, which provides some financial stability.55
Neutral
Cash Flow
The operating cash flow to net income ratio shows a positive trend, indicating operational cash flow generation despite net losses. However, the free cash flow has been volatile, with recent periods showing negative figures, which could pose liquidity challenges. The company needs to focus on generating consistent positive free cash flows to improve overall financial health.50
Neutral
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 1.29B | 1.34B | 1.64B | 2.07B | 2.10B | 1.71B | Gross Profit |
| 555.06M | 592.04M | 691.52M | 908.47M | 947.64M | 754.21M | EBIT |
| -100.51M | -118.89M | -177.80M | -208.04M | -63.36M | -51.66M | EBITDA |
| -69.92M | -76.06M | -107.34M | -172.28M | -33.43M | -29.05M | Net Income Common Stockholders |
| -99.61M | -128.84M | -171.97M | -207.12M | -8.88M | -67.12M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 276.86M | 246.97M | 257.60M | 212.98M | 231.33M | 286.49M | Total Assets |
| 557.05M | 486.86M | 614.48M | 764.53M | 819.15M | 769.43M | Total Debt |
| 0.00 | 117.50M | 154.76M | 170.35M | 147.32M | 164.51M | Net Debt |
| -167.50M | -45.36M | -84.68M | 39.41M | 17.54M | 21.05M | Total Liabilities |
| 203.76M | 299.84M | 367.17M | 441.88M | 358.30M | 368.39M | Stockholders Equity |
| 353.29M | 187.02M | 247.31M | 322.65M | 460.85M | 401.04M |
| Cash Flow | Free Cash Flow | ||||
| -9.29M | 14.24M | 38.82M | 9.04M | -50.93M | 12.67M | Operating Cash Flow |
| 6.11M | 28.21M | 57.83M | 55.40M | -15.68M | 42.88M | Investing Cash Flow |
| -126.13M | -78.74M | 64.33M | 10.23M | 39.09M | -70.46M | Financing Cash Flow |
| -15.18M | -15.49M | -15.54M | -60.25M | -38.88M | -1.44M |
Stitch Fix Technical Analysis
Negative
4.23
Price Trends
4.80
Negative
4.32
Negative
3.97
Positive
Market Momentum
-0.19
Positive
37.73
Neutral
24.92
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SFIX, the sentiment is Negative. The current price of 4.23 is below the 20-day moving average (MA) of 4.84, below the 50-day MA of 4.80, and above the 200-day MA of 3.97, indicating a neutral trend. The MACD of -0.19 indicates Positive momentum. The RSI at 37.73 is Neutral, neither overbought nor oversold. The STOCH value of 24.92 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SFIX.
Stitch Fix Risk Analysis
Stitch Fix disclosed 45 risk factors in its most recent earnings report. Stitch Fix reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Stitch Fix Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Performance Comparison
SFIX
Stitch Fix
4.23
1.91
82.33%
URBN
Urban Outfitters
54.23
12.31
29.37%
REAL
RealReal
5.44
2.19
67.38%
Stitch Fix Earnings Call Summary
Earnings Call Date: Mar 11, 2025 | % Change Since: 0.00% | Next Earnings Date: Jun 10, 2025
Earnings Call Sentiment Positive
The earnings call reflects a positive trend in financial performance and strategic execution, with revenue and EBITDA exceeding expectations and growth in key segments like men's and Freestyle. Despite the decline in active clients, the company demonstrates significant operational improvements and strategic investments that bolster its outlook.Highlights
Revenue and EBITDA Exceed Expectations
Stitch Fix reported second-quarter revenue of $312.1 million and adjusted EBITDA of $15.9 million, both exceeding expectations. This led to an increase in annual guidance for fiscal 2025.
Sequential Improvement in Revenue Comps
The company achieved a 710 basis point sequential improvement in year-over-year revenue comps and a contribution margin of 33%, marking the fourth consecutive quarter above 30%.
Men's Business and Freestyle Channel Growth
Both the men's business and the Freestyle channel returned to year-over-year revenue growth, indicating success in strategic investments and reimagined client experiences.
Increased Average Order Value (AOV)
AOV was up 9% year-over-year, driven by higher keep rates, AUR, and items per Fix. This marks the sixth consecutive quarter of year-over-year AOV increase.
Improved Inventory Management
Net inventory was down 13% year-over-year and 8% quarter-over-quarter, aided by AI tools for better inventory management.
Gross Margin and Contribution Margin Improvements
Gross margin for Q2 was 44.5%, up 110 basis points year-over-year. Contribution margin was 33%, sustaining above the historical range of 25%-30%.
Lowlights
Active Client Decline
Active clients ended the quarter at 2.4 million, down 16% year-over-year and 2.6% quarter-over-quarter, presenting a challenge for future growth.
Challenges in Client Growth
Although recent AOV increases present growth opportunities, they also pose challenges for future revenue growth comps, particularly as active client numbers continue to decline.
Company Guidance
During the second quarter of fiscal year 2025, Stitch Fix exceeded its expectations with revenue reaching $312.1 million and adjusted EBITDA standing at $15.9 million. The company reported a 9% year-over-year increase in average order value (AOV), driven by improvements in keep rate, average unit retail (AUR), and items per Fix. Additionally, the contribution margin was 33%, marking the fourth consecutive quarter above 30%. Despite a 16% year-over-year decline in active clients to 2.4 million, revenue per active client (RPAC) grew by 4% to $537. Gross margin improved by 110 basis points to 44.5%, and inventory levels were reduced by 13% year-over-year to $109.6 million. Encouraged by these results, Stitch Fix raised its annual revenue guidance to between $1.225 billion and $1.240 billion and expects adjusted EBITDA for the year to range from $40 million to $47 million.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.