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Oct 2, 2018
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Stitch Fix disappoints despite strong growth; announces expansion to UK

Published
Oct 2, 2018

San Francisco-based online subscription and personal shopping service Stitch Fix announced plans for transatlantic expansion on Monday, while also reporting impressive increases in revenue and earnings for Q4 – just not quite impressive enough to meet analysts’ high expectations.


Stitch Fix's shares dropped more than 20% after the bell on Monday - Instagram: @stitchfix

 
The company’s net revenues for the fourth quarter ended July 28, 2018 came to $318.3 million, up 23% compared to the prior-year period. This was comfortably within Stitch Fix’s guidance of between $310 million and $320 million but fell short of analysts’ expectations of $319 million.
 
Having seen revenue increases of 25% in Q2 and 29% in Q3, it seems like the pressure is now on for Stitch Fix, which launched its IPO in November of last year, to maintain this level of rapid growth.

It was a similar story with active clients, of which the company now boasts 2.7 million, an increase of 25% year over year. And yet, according to StreetAccount, this total too was under analysts’ expectations of 2.81 million.
 
Indeed, despite Stitch Fix’s strong growth, its shares took a dive of more than 20% after the bell on Monday as its Q4 results disappointed on all but earnings, which actually beat out estimates to total $18.3 million, compared to the loss of $4.5 million seen by the company in the fourth quarter of 2017.
 
The company’s full-year revenues for fiscal 2018 totaled $1.2 billion, a 26% increase in comparison to the same period in the previous year, while net income came to $44.9 million.
 
“In our first year as a public company, we have demonstrated our ability to transform the shopping experience while consistently delighting our clients across Women's, Men's and Kids,” said Stitch Fix founder and CEO Katrina Lake in a release. “I'm proud of our results, and excited for the future. This is just the beginning for Stitch Fix.”
 
The company has also announced plans to expand to the UK by the end of fiscal 2019 and has set up an online waitlist for interested potential clients in the country. “We believe our ability to create a uniquely personalized shopping experience is something that will resonate with consumers and brands outside of the US,” explained Lake. “We can't wait to show our first UK clients how effortless, convenient and fun Stitch Fix is.”
 
Disregarding the UK business, Stitch Fix expects revenues in fiscal 2019 to range between $1.47 billion and $1.53 billion, an increase of between 20 and 25%.

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