Stitch Fix, Inc. (SFIX) shares took a significant dive on Wednesday following the release of the company’s fourth-quarter earnings report for fiscal year 2024. Investors reacted negatively to the news, sending the stock down over 36% in early trading. The company missed analysts’ estimates for earnings per share, reporting a loss of 29 cents, compared to the anticipated loss of 19 cents. Despite this, Stitch Fix managed to surpass revenue expectations, generating $319.6 million in sales against an anticipated $318.5 million. However, the revenue figure represents a concerning 12.4% decrease year-over-year.
The company’s performance also revealed a troubling trend in active clients, which declined by 19.6% year-over-year, reaching a current count of 2,508,000. While Stitch Fix CEO Matt Baer expressed confidence in their transformation strategy and highlighted their ability to meet guidance, the overall picture painted a challenging landscape for the company.
Despite the negative reaction, Stitch Fix did report positive figures for the fiscal year as a whole. The company achieved $1.34 billion in net revenue, $29.3 million in Adjusted EBITDA, and $14.2 million in free cash flow.
Looking ahead, Stitch Fix projects net revenue between $303 million and $310 million for the first quarter of fiscal year 2025. Following the earnings release, several analysts adjusted their price targets for SFIX. Telsey Advisory Group maintained a Market Perform rating and a $4 price target, while Canaccord Genuity lowered its target from $4.5 to $3.5, maintaining a Hold rating. The market’s reaction to Stitch Fix’s earnings underscores the ongoing challenges the company faces in navigating the evolving retail landscape. With declining active clients and a significant revenue drop, Stitch Fix needs to demonstrate a clear path to regaining investor confidence and achieving sustainable growth.
