Stitch Fix, an online styling service based in San Francisco, has announced better-than-expected revenue and a reduced loss for the first quarter of the fiscal year. Despite these positive results, the company’s outlook for the fourth quarter did not meet analysts’ expectations, causing disappointment among investors.

During the first quarter, Stitch Fix generated $581.2 million in net revenue, a 19% increase compared to the same period last year. This surpassed analysts’ predictions of $571 million. The platform also experienced an 11% growth in active clients, reaching a total of 4,180,000. Additionally, the net revenue per active client increased by 12% to $524.

Stitch Fix’s revenue growth in Q1 was driven by the success of its women’s and kids’ segments, as well as its UK operations, which nearly doubled their revenue compared to the previous year. The introduction of the Freestyle service, a direct-buy option that complements the core personal styling business, also contributed to revenue growth.

Despite the positive results, Stitch Fix reported a net loss of $1.8 million, or $0.02 per diluted share, in comparison to a net income of $9.5 million, or $0.09 per diluted share, in the same quarter of the previous year. However, this loss was significantly lower than the predicted loss of $0.14 per share.

CEO Elizabeth Spaulding expressed satisfaction with the company’s strong performance, emphasizing the success of both the Fix and Freestyle services. She highlighted the company’s focus on enhancing the customer experience through new product features and expanded merchandise selections.

Nevertheless, analysts were disappointed with Stitch Fix’s guidance for the fourth quarter. The company projects revenues of $505 million to $520 million, citing supply chain challenges as a hindrance. This falls short of analysts’ expectations of $585 million in revenue for the quarter.

For the full fiscal year 2022, which concludes on July 30, 2022, Stitch Fix expects year-over-year revenue growth at a high single-digit rate. This projection is lower than analysts’ prediction of a 15.7% increase.

In conclusion, Stitch Fix reported better-than-expected results for the first quarter, demonstrating strong revenue growth and a reduced loss. However, the company’s outlook for the fourth quarter and the full fiscal year did not meet analysts’ predictions, leading to disappointment among investors. Stitch Fix will need to address supply chain challenges and continue innovating to meet market expectations and drive future growth.

Useful links:
1. Stitch Fix Official Website
2. CNBC Article on Stitch Fix’s Q1 2022 Earnings