Shipping Delays Hurting the Business
However, the clothing subscription company reported business revenues of $504.1 million to miss on the $512.2 million expected from Wall Street. On a year-to-year (YOY) basis, the company saw its sales rising 12%. A year earlier, the fashion company reported a profit of $0.11 per share.
“This level of demand for our model of personalized discovery and radical convenience positions us well to continue to capture share amidst the ongoing shift in the retail landscape, and gives us confidence in our long-term opportunity,” founder and CEO of the clothing subscription company, Katrina Lake, said in a statement.
“The fundamentals of our business are strong, we continue to expand our service in innovative new ways, and we are excited to continue to deliver on our strategy,” she added.
The clothing subscription company said that shipping delays over the holiday season resulted in a backlog and ultimately lower revenues. Its business model records revenue when customers check out items and not when the shipping takes place.
Moreover, revenues were impacted by lower-than-expected consumer spending as the clothing subscription company’s customers spent more money on gifts for others rather than on themselves.
According to the company, active clients spent $467 on average, representing a decline of 7% on a YOY basis. Still, the company said it added 110,000 new active clients during the quarter to bring the total number of clients to 3.9 million.
As far as the guidance is concerned, Stitch Fix said it projects to record net sales between $505 million and $515 million, which equals a YOY growth of 36% to 39%. On a full-year basis, revenues are expected to soar between 18% to 20%, which represents a downgrade compared to a range of 20% to 25%, reported earlier. This is also lower than the expected 22.6% from market analysts.
Stitch Fix stock (SFIX) fell sharply in pre-open trading today to trade over 20% in the red.
Stitch Fix, an online personal styling business, reported lower-than-expected business revenues for the most recent quarter amid shipping delays over the holiday season. Moreover, the clothing subscription company guided lower to send its shares sharply lower in pre-market trading.