Stitch Fix Earnings Beat Expectations. Why the Stock Is Getting Crushed.

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Updated Dec. 8, 2021 6:58 americium ET / Original Dec. 7, 2021 5:21 p.m. ET

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Courtesy StitchFix

Shares of Stitch Fix tumbled successful after-hours trading connected Tuesday adjacent though the online idiosyncratic shopping website reported a narrower-than-expected nonaccomplishment for its fiscal archetypal 4th and bushed analysts’ income expectations acknowledgment to a boost successful its Freestyle work that allows customers to store straight connected the site.

Stitch Fix (ticker: SFIX), whose shares were down astir 25% to $18.76 successful premarket trading, posted a fiscal third-quarter nonaccomplishment of 2 cents a share, little than the 14-cent nonaccomplishment estimated by analysts.

“We are successful a large learning signifier close present arsenic we physique retired our caller Freestyle experience,” said CEO Elizabeth Spaulding connected a telephone with investors Tuesday evening.

Revenue roseate to $581 million, up 19% from past year, surpassing the $571 cardinal expected by Wall Street.

Active users grew 11% to 4.18 cardinal from a twelvemonth ago. That was inactive little than the 4.23 cardinal progressive clients analysts projected, according to FactSet.

Stitch Fix besides chopped its gross outlook for the fiscal year, saying that it’s successful a transitional play of bringing connected caller users amid supply-chain crunches.

“The proviso concatenation issues we would expect to subside implicit the coming twelvemonth …We’re learning a batch close now,” Spaulding said. “We’re assured we’re going to amended implicit the coming quarters.”

Investors connected the telephone weren’t truthful convinced, though, and brought up concerns that the Freestyle income maturation and marketplace stock for the institution mightiness outweigh different products it offers.

Spaulding says she sees an accidental to navigate the request for assorted products and services.

“We expect generating much postulation to tract done some stitchfix.com done merchandise item pages and caller channels,” she said. “In the short-term, radical are making a tradeoff between, ‘do I privation to effort Fix, bash I privation to effort Freestyle?’ , and truthful that’s the learning signifier we’re successful close present and we spot accidental to get better.”

Stitch Fix sends customers covering and accessories that are selected by a stylist based connected accusation provided, and items tin beryllium purchased oregon returned. With Stitch Freestyle, customers tin instantly bargain items that person been curated for them.

Stitch Fix anticipates gross expanding astatine a precocious single-digit rate, down from its anterior outlook of 15% oregon much growth. That compares with the 15.7% twelvemonth implicit twelvemonth maturation analysts had been expecting.

Following Wednesday’s adjacent of trading, shares of Stitch Fix person fallen 57% truthful acold successful 2021.

“Besides the information that the banal is inexpensive (

Write to Logan Moore astatine logan.moore@barrons.com

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