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Category: Stock Market and Stitch Fix
Date: 2 October 2019 Stock Price: $20.06 We take a look at the 4th quarter earnings report of their 2019 fiscal year of Stitch Fix a leading online personal styling service available to men, women and kids.
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About Stitch Fix
Stitch Fix is the world’s leading online personal styling service. We combine data science and human judgment to deliver apparel, shoes, and accessories personalized to our clients’ unique tastes, lifestyles, and budgets. Our service is available for women, men, and kids, and designed to help all our clients look, feel, and be their best selves.
Overview of Stitch Fix's latest earnings report
- Net Revenue: $432.149 million (up from $318.295 million for the same quarter of the previous year
- Revenue increased by 35.7% over the last 12 months
- Cost of sales: $241.785 million (up from $176.877 million for the same quarter of the previous year)
- Cost of sales increased by 36.6% over the last 12 months
- Net income: $7.179 million (down from $18.284 million for the same quarter of the previous year)
- Diluted earnings per share: $0.07 (down from $0.28 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 101.111 million (up from 98.019 million for the same quarter of the previous year)
- Cash and cash equivalents: $170.932 million
- Cash and cash equivalents per share: $1.69
- Cash and cash equivalents makes up 8.42% of Stitch Fix's market capital
- Cash and cash equivalents makes up 27.7% of Stitch Fix's total assets
- Accounts receivable: $1.065 billion
- Accounts receivable makes up 14.83% of United Natural Foods' total assets
- Inventories: $118.216 million
- Inventories makes up 19.1% of Stitch Fix's total assets
- Stockholders equity of Stitch Fix's: $396 million
- Stockholders equity per share for Stitch Fix's: $3.91
- So Stitch Fix's is trading at 5.11 times it stockholders equity per share which is well outside the expected range of between 2 and 4 times most companies tend to trade at.
- Cash provided by operating activities for full fiscal 2019: $78.594 million
- Cash provided by operating activities per share for full fiscal 2019: $0.77
Stitch Fix' management commentary on the results and earnings guidance
SAN FRANCISCO, Oct. 01, 2019 (GLOBE NEWSWIRE) -- Stitch Fix, Inc. (NASDAQ:SFIX), the leading online personal styling service, has released its financial results for the fourth quarter and full fiscal year 2019 ended August 3, 2019, and posted a letter to its shareholders on its investor relations website. Fiscal year 2019 included 53 weeks, with the additional week occurring in the fourth quarter
“Q4 was another strong quarter for us, delivering net revenue of $432.1 million, representing 36% year-over-year growth,” said Stitch Fix founder and CEO Katrina Lake. “We grew our active clients to 3.2 million, an increase of 18% year over year. For the full year, we grew net revenue 29% year over year to $1.6 billion and captured more of our large addressable client base by adding nearly half a million active clients in 2019. In addition, we consistently demonstrated our ability to deliver great client experiences, growing revenue per active client in every quarter of fiscal 2019, including 9% year over year in Q4. These gains are a testament to the strength of our data science capabilities.”
Lake continued, “In our second year as a public company I’m proud of how much we’ve accomplished, and the opportunities we’ve created for future growth across categories and geographies. We have built a personalization engine with incredible potential, and I’m excited to expand on our platform in new and innovative ways.”
In Q4’19, we introduced our new direct-buy functionality, which enables clients to choose and purchase items outside of a Fix directly from our website. One of these offerings, Shop New Colors, was introduced to our adult U.S. clients during the quarter, allowing them to buy previously purchased items in new colors, prints, and sizes. Clients can request these items on our app or website, and the items are then delivered directly without a styling fee. We are excited to offer clients more of the pieces they love in a personalized and convenient manner, and have been pleased with the early engagement and positive client feedback.
We also began applying this direct-buy functionality to test a new offering called Shop Your Looks with our Women’s U.S. clients. What’s unique about the offering is that it is curated and personalized to every client. It is based on items that clients have already purchased from us, and presents a highly personalized subset of algorithmically generated items, delivered to clients in the form of shoppable styling recommendations for pieces already in their closets. While we have tens of thousands of items available in our assortment that we could show, we are so confident in our personalization capabilities that we choose to only show clients an average of 30 to 40 shoppable items at one time.
Through this highly personalized and curated experience, we’ve been pleased to see that over just a brief, eight -week beta test period, over one third of clients that purchase through Shop Your Looks engage with us multiple times, and approximately 60 % of clients who buy through the offering purchase two items or more . Seeing these results demonstrates the tremendous opportunity to extend our personalization platform in new and incremental ways . We believe this direct -buy functionality has the potential to drive further engagement between Fixes, increase our ability to serve clients well and gain greater share of wallet, while also providing new entry points into our business .
Active Clients
We grew our active client count to 3.2 million as of August 3, 2019, an increase of 494,000 clients and 18.0% year over year. We define an active client as a client who checked out a Fix or was shipped an item using our new direct-buy functionality in the preceding 12-month period (52 weeks), measured as of the last day of that period. A client checks out a Fix when he or she indicates which items he or she is keeping through our mobile app or website. We consider each Men’s, Women’s or Kids account as a client, even if they share the same household.
“Q4 was another strong quarter for us, delivering net revenue of $432.1 million, representing 36% year-over-year growth,” said Stitch Fix founder and CEO Katrina Lake. “We grew our active clients to 3.2 million, an increase of 18% year over year. For the full year, we grew net revenue 29% year over year to $1.6 billion and captured more of our large addressable client base by adding nearly half a million active clients in 2019. In addition, we consistently demonstrated our ability to deliver great client experiences, growing revenue per active client in every quarter of fiscal 2019, including 9% year over year in Q4. These gains are a testament to the strength of our data science capabilities.”
Lake continued, “In our second year as a public company I’m proud of how much we’ve accomplished, and the opportunities we’ve created for future growth across categories and geographies. We have built a personalization engine with incredible potential, and I’m excited to expand on our platform in new and innovative ways.”
In Q4’19, we introduced our new direct-buy functionality, which enables clients to choose and purchase items outside of a Fix directly from our website. One of these offerings, Shop New Colors, was introduced to our adult U.S. clients during the quarter, allowing them to buy previously purchased items in new colors, prints, and sizes. Clients can request these items on our app or website, and the items are then delivered directly without a styling fee. We are excited to offer clients more of the pieces they love in a personalized and convenient manner, and have been pleased with the early engagement and positive client feedback.
We also began applying this direct-buy functionality to test a new offering called Shop Your Looks with our Women’s U.S. clients. What’s unique about the offering is that it is curated and personalized to every client. It is based on items that clients have already purchased from us, and presents a highly personalized subset of algorithmically generated items, delivered to clients in the form of shoppable styling recommendations for pieces already in their closets. While we have tens of thousands of items available in our assortment that we could show, we are so confident in our personalization capabilities that we choose to only show clients an average of 30 to 40 shoppable items at one time.
Through this highly personalized and curated experience, we’ve been pleased to see that over just a brief, eight -week beta test period, over one third of clients that purchase through Shop Your Looks engage with us multiple times, and approximately 60 % of clients who buy through the offering purchase two items or more . Seeing these results demonstrates the tremendous opportunity to extend our personalization platform in new and incremental ways . We believe this direct -buy functionality has the potential to drive further engagement between Fixes, increase our ability to serve clients well and gain greater share of wallet, while also providing new entry points into our business .
Active Clients
We grew our active client count to 3.2 million as of August 3, 2019, an increase of 494,000 clients and 18.0% year over year. We define an active client as a client who checked out a Fix or was shipped an item using our new direct-buy functionality in the preceding 12-month period (52 weeks), measured as of the last day of that period. A client checks out a Fix when he or she indicates which items he or she is keeping through our mobile app or website. We consider each Men’s, Women’s or Kids account as a client, even if they share the same household.
Stitch Fix (NASDAQ: SFIX) stock price history
The image below, obtained from Google, shows the stock price history of Stitch Fix (NASDAQ:SFIX) since their listing. And it's been a very volatile and mildly successful time for Stitch stockholders. At their listing in November 2017 they were trading around $15.50 a stock and they are currently trading at $20.06 a stock. That is a return of 29.4% provided in basically the last two years, which is not to bad. The stock is however trading at a lot closer to its 52 week low of $16.05 than it is to its 52 week high of $46.67 which to us is a clear indication that the momentum and sentiment towards Stitch Fix's stock is very negative. And looking at the pre-market the stock is down almost 10% which doesn't bode well for the group's stockholders.
Recent coverage of Stitch Fix
The extract below shows the latest coverage of Stitch Fix as obtained from Zacks.
Stitch Fix (SFIX - Free Report) came out with quarterly earnings of $0.07 per share, beating the Zacks Consensus Estimate of $0.04 per share. This compares to earnings of $0.17 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 75%. A quarter ago, it was expected that this online clothing styling service would post a loss of $0.03 per share when it actually produced earnings of $0.07, delivering a surprise of 333.33%.
Over the last four quarters, the company has surpassed consensus EPS estimates four times. Stitch Fix, which belongs to the Zacks Retail - Apparel and Shoes industry, posted revenues of $432.15 million for the quarter ended July 2019, surpassing the Zacks Consensus Estimate by 0.01%. This compares to year-ago revenues of $318.30 million. The company has topped consensus revenue estimates four times over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Stitch Fix shares have added about 12.6% since the beginning of the year versus the S&P 500's gain of 18.7%.
Read the full article here
Stitch Fix (SFIX - Free Report) came out with quarterly earnings of $0.07 per share, beating the Zacks Consensus Estimate of $0.04 per share. This compares to earnings of $0.17 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 75%. A quarter ago, it was expected that this online clothing styling service would post a loss of $0.03 per share when it actually produced earnings of $0.07, delivering a surprise of 333.33%.
Over the last four quarters, the company has surpassed consensus EPS estimates four times. Stitch Fix, which belongs to the Zacks Retail - Apparel and Shoes industry, posted revenues of $432.15 million for the quarter ended July 2019, surpassing the Zacks Consensus Estimate by 0.01%. This compares to year-ago revenues of $318.30 million. The company has topped consensus revenue estimates four times over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Stitch Fix shares have added about 12.6% since the beginning of the year versus the S&P 500's gain of 18.7%.
Read the full article here
Stitch Fix (NASDAQ: SFIX) latest stock valuation
So what is Stitch Fix (NASDAQ: SFIX) stock worth based on the release of their latest earnings report? Based on their earnings report and the fiscal guidance provided our valuation models provide a target (full value) price for Stitch Fix of $24 a stock. We therefore believe that the stock is undervalued.
We usually suggest long term investors look to enter a stock at least 10% below our target (full value) price which in this case is $24 So a good entry point into Stitch Fix stock would be at $21.60 or below. Since the stock is trading at well below these levels we rate the stock of Stitch Fix as a buy.
We usually suggest long term investors look to enter a stock at least 10% below our target (full value) price which in this case is $24 So a good entry point into Stitch Fix stock would be at $21.60 or below. Since the stock is trading at well below these levels we rate the stock of Stitch Fix as a buy.