Stitch Fix (SFIX) delivered a surprising beat on its first-quarter earnings report, sending its stock price soaring over 26% on Wednesday. The positive market reaction stems from the company’s better-than-expected financial performance and a confident outlook for the future.
The online personal styling service reported fiscal first-quarter revenue of $318.8 million, comfortably surpassing analyst estimates of $306.93 million. This signifies a strong rebound and positive progress towards the company’s stated goal of returning to revenue growth. Further boosting investor sentiment was the company’s reported loss of 5 cents per share, significantly smaller than the anticipated loss of 13 cents per share. This suggests improved operational efficiency and cost management within Stitch Fix.
While the number of active clients dipped slightly, declining 3% quarter-over-quarter to 2.43 million, this was offset by a notable increase in net revenue per client. This key metric jumped 4.9% year-over-year, reaching $531. This demonstrates Stitch Fix’s success in increasing the value of each customer interaction, a critical factor in driving profitability. The company also showcased strong cash flow, reporting $14.3 million in net cash from operations and $9.9 million in free cash flow during the quarter. It ended the period with a healthy $253.3 million in cash, cash equivalents, and investments.
CEO Matt Baer attributed the positive results to “the newness we have brought to our assortment as well as the improvements we’ve made to our client experience.” He emphasized that this success reflects the ongoing implementation of the company’s transformation strategy and reaffirmed the company’s projection of returning to revenue growth by the end of fiscal year 2026.
Looking ahead, Stitch Fix provided encouraging guidance. The company projects fiscal second-quarter revenue in the range of $290 million to $300 million, exceeding the consensus estimate of $283.53 million. Furthermore, its full-year 2025 revenue forecast of $1.14 billion to $1.18 billion aligns with or surpasses analysts’ expectations. This positive outlook reinforces investor confidence in Stitch Fix’s ability to sustain its recent growth trajectory.
The positive financial report and future guidance prompted a positive response from analysts. Telsey Advisory Group analyst Dana Telsey maintained a Market Perform rating on Stitch Fix while raising the price target from $4 to $6, indicating a positive view on the company’s prospects.
The significant stock price increase reflects the market’s enthusiastic response to Stitch Fix’s improved financial performance and promising future outlook. The company’s strategic initiatives seem to be paying off, leading to a more optimistic view of its long-term growth potential.
