Stitch Fix (NASDAQ: SFIX), the online personalized-apparel retailer, witnessed a remarkable surge of 12.1% in its share price on Tuesday, following the release of its fiscal Q4 report for the period ending July 29, 2023. This notable increase in stock value came on the heels of a 6.6% decline observed during Monday’s after-hours trading session.
The Q4 report unveiled several pivotal metrics, notably a revenue decline of 22%, totaling $375.8 million. This figure, although slightly above Wall Street’s anticipated 23% decrease, managed to surpass the company’s guidance range of $365 million to $375 million. Furthermore, the number of active clients witnessed a year-over-year reduction of 13%, extending an 11% decline from the previous quarter.
Stitch Fix reported an operating loss of $31.2 million for the quarter, marking a significant decrease of 68% compared to the prior-year period. This substantial improvement was primarily attributed to a reduction of over $97 million in selling, general, and administrative expenses. The net loss for the quarter stood at $28.7 million, or $0.24 per share, in contrast to the previous year’s net loss of $96.3 million, or $0.89 per share during the same period.
An additional highlight was the company’s positive free cash flow (FCF), which was achieved for the third consecutive quarter, amounting to $17.7 million. This positive FCF was driven by cost-cutting initiatives that allowed the company to conclude the year with $257.6 million in cash, cash equivalents, and short-term investments, all while maintaining a clean slate of no long-term debt.
In a significant strategic move, Stitch Fix announced its intention to exit the U.K. market, citing difficulties in gaining traction. For fiscal 2024, the company projected a revenue decline ranging between 20% and 16%. In specific terms, for Q1 2024, concluding on October 28, the company anticipates revenue between $355 million and $365 million for its U.S. business and a final $7 million for its U.K. business, which is set to close in the first quarter of fiscal 2024. For the full fiscal year, Stitch Fix foresees revenue ranging from $1.30 billion to $1.37 billion for its U.S. business and an additional $8 million for its U.K. business.
Despite the recent surge in share price, potential investors are advised to exercise caution when considering Stitch Fix as an investment option. Concerns persist regarding the limited appeal of its business model within the broader apparel-buying population.
