San Francisco-based online styling service, Stitch Fix, has announced an increase in revenues for the fourth quarter ending on August 1, 2020. However, despite this positive news, the company disappointed investors by reporting a net loss of $44.5 million, causing a drop of over 14% in its stock during after-hours trading.

Last year, Stitch Fix recorded net earnings of $7.2 million in the fourth quarter, making this year’s loss a significant setback. Wall Street analysts had predicted a loss of $0.18, indicating that the company’s performance fell even further below expectations.

Despite the disappointing net loss, Stitch Fix emphasized its 11% growth in net revenue for the fourth quarter, which amounted to $443.4 million. This increase was primarily driven by a 9% rise in active clients, reaching a total of 3.5 million. Additionally, there was a 2% growth in net revenue per active client.

Katrina Lake, the founder and CEO of Stitch Fix, expressed her satisfaction with the company’s return to revenue growth and stated that she was “very pleased” with the fourth-quarter results. Elizabeth Spaulding, the company’s president, also highlighted the success of Stitch Fix’s new direct buy offering. This feature enables clients to shop personalized items and outfits directly from the platform’s feed-based experience.

For the full fiscal year, Stitch Fix reported net revenue of $1.7 billion, which marked an 11% increase compared to the previous year. However, the company also reported a net loss of $67.1 million for the year, in contrast to net earnings of $36.9 million in the previous year.

Stitch Fix faced challenges during the third quarter due to the impact of the COVID-19 pandemic, resulting in fulfillment delays and a decline in sales. Despite these obstacles, the company believes it has effectively navigated the situation and holds an optimistic outlook for the future of e-commerce.

Building on the success of its direct buy offering, Stitch Fix plans to expand its personalized shopping experience to a broader consumer base as the popularity of online shopping continues to grow. Despite the net loss, the company remains confident in its ability to seize opportunities in the flourishing e-commerce market.

Sources:

1. [Stitch Fix Investor Relations – News](https://investors.stitchfix.com/news/news-details/2020/Stitch-Fix-Announces-Fiscal-2020-Fourth-Quarter-and-Full-Year-Financial-Results/default.aspx)

2. [CNN Business – Stitch Fix revenue grows 11%, tiny profit beats forecast](https://www.cnn.com/2020/10/13/investing/stitch-fix-earnings/index.html)