SAN FRANCISCO, March 04, 2024 (GLOBE NEWSWIRE) — Stitch Fix, Inc. (NASDAQ:SFIX), the trusted online personal styling service, today announced its financial results for the second quarter of fiscal 2024, ended January 27, 2024.
“The original Stitch Fix vision, to create an easier and more enjoyable way for people to shop for clothing and accessories, remains both relevant and compelling,” said Matt Baer, Chief Executive Officer. “Our transformation efforts are grounded in fully realizing that vision and include both strengthening the foundation of our company and reimagining our client experience. I am encouraged by the progress we continue to make and am confident we have the right strategic priorities in place to set us up to drive sustainable, profitable growth.”
During the first quarter of fiscal 2024, we ceased operations of our UK business and met the accounting requirements for reporting the UK business as a discontinued operation. Accordingly, our condensed consolidated financial statements reflect the results of the UK business as a discontinued operation for all periods presented. Unless otherwise noted, amounts and disclosures below relate to our continuing operations.
Second Quarter Fiscal 2024 Key Metrics and Financial Highlights
Net revenue from continuing operations of $330.4 million, a decrease of 18% year-over-year.
Active clients from continuing operations of 2,805,000, a decrease of 184,000, or 6%, quarter-over-quarter; and a decrease of 572,000, or 17%, year-over-year.
Net revenue per active client (“RPAC”) from continuing operations of $515, a decrease of 3% year-over-year.
Gross margin of 43.4%, an increase of 250 basis points year-over-year, which reflects improved inventory health and transportation leverage.
Net loss from continuing operations of $35.0 million and diluted loss per share from continuing operations of $0.29.
Adjusted EBITDA from continuing operations of $4.4 million, which reflects continued cost management discipline.
Free cash flow from continuing operations was negative $26.1 million in the second fiscal quarter, as expected, due to the timing of receipts related to our inventory purchases in the first fiscal quarter.
We ended the quarter with $229.8 million of cash, cash equivalents, and investments attributable to continuing operations; and no bank debt.
Financial Outlook
Our financial outlook for our continuing operations for the third quarter of fiscal 2024 ending April 27, 2024 is as follows:
Q3 2024
Net Revenue from Continuing Operations
$300 million – $310 million
(22)% – (19)% YoY
Adjusted EBITDA from Continuing Operations
$(5) million – $0 million
(2)% – 0% margin
Our fiscal year is a 52-week or 53-week period ending on the Saturday closest to July 31. The fiscal year 2023 was a 52-week year and the fiscal year 2024 is a 53-week year, with the extra week occurring in the fourth quarter ending August 3, 2024.
Our financial outlook for our continuing operations for fiscal year 2024, which includes the 53rd week, is as follows:
Fiscal Year 2024
Net Revenue from Continuing Operations
$1.29 billion – $1.32 billion
(19)% – (17)% YoY
(20)% – (18)% YoY
adjusted to a 52-week period (1)
Adjusted EBITDA from Continuing Operations
$10 million – $20 million
1% – 2% margin
(1) Full fiscal year 2024 net revenue from continuing operations has been adjusted to remove the impact of the 53rd week for year-over-year comparative purposes.
Stitch Fix has not reconciled its Adjusted EBITDA from continuing operations outlook to GAAP net income (loss) from continuing operations because it does not provide an outlook for GAAP net income (loss) from continuing operations due to the uncertainty and potential variability of restructuring and other one-time costs related to continuing operations, net other income (expense), provision for income taxes, and stock-based compensation expense, which are reconciling items between Adjusted EBITDA from continuing operations and GAAP net income (loss) from continuing operations. Because Stitch Fix cannot reasonably predict such items, a reconciliation of the non-GAAP financial measure outlook to the corresponding GAAP measure is not available without unreasonable effort. We caution, however, that such items could have a significant impact on the calculation of GAAP net income (loss) from continuing operations. For more information regarding the non-GAAP financial measures discussed in this release, please see “Non-GAAP Financial Measures” below.
Conference Call and Webcast Information
Matt Baer, Chief Executive Officer of Stitch Fix, and David Aufderhaar, Chief Financial Officer of Stitch Fix, will host a conference call at 2:00 p.m. Pacific Time today to discuss the Company’s financial results and outlook. A live webcast of the call will be accessible on the investor relations section of the Stitch Fix website at https://investors.stitchfix.com.
To access the call by phone, please register at the following link:
Dial-In Registration: https://register.vevent.com/register/BI1f5c9a29143e4a63b5771ac3029eab2d
Upon registration, telephone participants will receive the dial-in number along with a unique PIN number that can be used to access the call. A replay of the webcast will also be available for a limited time at https://investors.stitchfix.com.
About Stitch Fix, Inc.
Stitch Fix combines the human touch of expert stylists with the precision of advanced data science to make online personal styling accessible to everyone. Stitch Fix helps millions of clients across the United States find clothing and accessories they love through a unique model that can extend far beyond the closet to define the future of shopping. For more, visit https://www.stitchfix.com.
Forward-Looking Statements
This press release, the related conference call, and webcast contain forward-looking statements within the meaning of the federal securities laws. All statements other than statements of historical fact could be deemed forward looking, including but not limited to statements regarding our expectations for future financial performance, including our profitability and long-term targets; guidance on financial results and metrics for the third quarter and full fiscal year of 2024; that the execution of our strategy and priorities will enable us to achieve long-term, sustainable, and profitable growth and positive free cash flow; our ability to strengthen the foundation of our business across all disciplines and embed retail best practices across the enterprise; that the re-imagining the client experience will help us attract and engage the right customers, drive higher lifetime value, and will lead to long-term growth; that our initiatives to strengthen the foundation of our business will provide the opportunity for us to realize additional efficiencies in our operations; our ability to further strengthen our private brand portfolio by making enhancements to our existing brands and introducing new ones; our ability to introduce a new onboarding experience that will be a more dynamic and interactive way for clients to begin their relationship with us; our ability to deepen engagement by developing new ways to inspire and empower clients and by enabling more direct ways to connect with our stylists; our ability to achieve our plans to significantly evolve the Stitch Fix client experience; that actions we took in the second quarter, include negotiating cost savings throughout our business, optimizing our carrier mix, implementing efficiency measures, and ensuring we have the right organizational structure in place, will enable our future success; that there are additional opportunities for us to operate more efficiently and drive more leverage in both our fixed and variable cost structures; and our expectations regarding free cash flow, gross margin, inventory levels, and advertising spend. These statements involve substantial risks and uncertainties, including risks and uncertainties related to the current macroeconomic environment; our ability to generate sufficient net revenue to offset our costs; consumer behavior; our ability to acquire, engage, and retain clients; our ability to provide offerings and services that achieve market acceptance; our data science and technology, stylists, operations, marketing initiatives, and other key strategic areas; risks related to our inventory levels and management; risks related to our supply chain, sourcing of materials and shipping of merchandise; risks related to international operations; our ability to forecast our future operating results; and other risks described in the filings we make with the SEC. Further information on these and other factors that could cause our financial results, performance, and achievements to differ materially from any results, performance, or achievements anticipated, expressed, or implied by these forward-looking statements is included in filings we make with the SEC from time to time, including in the section titled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended July 29, 2023. These documents are available on the SEC Filings section of the Investor Relations section of our website at: https://investors.stitchfix.com. We undertake no obligation to update any forward-looking statements made in this press release to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law. The achievement or success of the matters covered by such forward-looking statements involves known and unknown risks, uncertainties, and assumptions. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, our results could differ materially from the results expressed or implied by the forward-looking statements we make. You should not rely upon forward-looking statements as predictions of future events. Forward-looking statements represent our management’s beliefs and assumptions only as of the date such statements are made.
Stitch Fix, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except per share amounts)
January 27, 2024
July 29, 2023
Assets
Current assets:
Cash and cash equivalents
$
227,503
$
239,437
Short-term investments
2,321
18,161
Inventory, net
126,033
130,548
Prepaid expenses and other current assets
21,161
27,692
Current assets, discontinued operations
953
9,623
Total current assets
377,971
425,461
Property and equipment, net
63,522
79,757
Operating lease right-of-use assets
93,616
104,533
Other long-term assets
2,909
2,681
Long-term assets, discontinued operations
298
2,046
Total assets
$
538,316
$
614,478
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
74,303
$
96,730
Operating lease liabilities
27,086
28,210
Accrued liabilities
75,694
69,893
Gift card liability
11,357
10,328
Deferred revenue
9,765
11,366
Other current liabilities
9,154
8,802
Current liabilities, discontinued operations
2,062
12,782
Total current liabilities
209,421
238,111
Operating lease liabilities, net of current portion
111,936
125,418
Other long-term liabilities
3,688
3,639
Total liabilities
325,045
367,168
Stockholders’ equity:
Class A common stock, $0.00002 par value
1
1
Class B common stock, $0.00002 par value
1
1
Additional paid-in capital
653,170
615,236
Accumulated other comprehensive income (loss)
(432
)
527
Accumulated deficit
(409,427
)
(338,413
)
Treasury stock at cost
(30,042
)
(30,042
)
Total stockholders’ equity
213,271
247,310
Total liabilities and stockholders’ equity
$
538,316
$
614,478
Stitch Fix, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
(In thousands, except share and per share amounts)
For the Three Months Ended
For the Six Months Ended
January 27, 2024
January 28, 2023
January 27, 2024
January 28, 2023
Revenue, net
$
330,402
$
400,622
$
695,187
$
844,363
Cost of goods sold
186,922
236,866
392,604
493,297
Gross profit
143,480
163,756
302,583
351,066
Gross margin
43.4
%
40.9
%
43.5
%
41.6
%
Selling, general, and administrative expenses
181,518
227,038
369,282
462,884
Operating loss
(38,038
)
(63,282
)
(66,699
)
(111,818
)
Interest income
2,673
632
4,921
1,380
Other income (expense), net
578
(663
)
989
(840
)
Loss before income taxes
(34,787
)
(63,313
)
(60,789
)
(111,278
)
Provision for income taxes
169
131
338
318
Net loss from continuing operations
(34,956
)
(63,444
)
(61,127
)
(111,596
)
Net loss from discontinued operations, net of income taxes
(568
)
(2,127
)
(9,887
)
(9,893
)
Net loss
$
(35,524
)
$
(65,571
)
$
(71,014
)
$
(121,489