Stitch Fix Announces Second Quarter of Fiscal Year 2024 Financial Results

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