Stitch Fix Inc. shifted from turnaround mode into growth mode last fall — and picked up some momentum in the second quarter ended Jan. 31.
Now Matt Baer, chief executive officer, has to keep the ball rolling as comparisons and the consumer outlook get tougher headed into the second half.
The styling service — which sends users boxes of looks to try on at home — pushed its sales up 9.4 percent to $341.3 million in the fiscal second quarter, ended Jan. 31. That’s almost 3 percentage points better than the 6.6 percent gain analysts forecasted, according to Yahoo Finance.
Mark that as the company’s second consecutive quarter of growth, following the first quarter’s 7.3 percent gain.
It’s a significant turn for Stitch Fix and for Baer, who joined in June 2023, when sales were falling by more than 20 percent regularly.
Doing more with less is something companies often talk about, but fail to really achieve. So far, Stitch Fix is pulling it off.
The company’s active client count fell 3.5 percent from a year earlier to 2.3 million in the quarter, but average revenues per client increased 7.4 percent, leading to overall top-line gain.
Net losses tallied $2.7 million, but adjusted earnings before interest, taxes, depreciation and amortization hit $15.9 million.
Baer told WWD that the company was trending toward quarter-over-quarter growth in its active client base this quarter.
And he pointed to the quarter’s top-line growth as “a very clear sign that our strategy and our transformation efforts are resonating with clients.”
“We continue to see similar strength across all income segments within our client base,” he said. “And we attribute that to the deep personal and enduring relationships that we have with our clients. So even in a period where spend contracts within apparel, we see an opportunity to continue to grow and separate ourselves from the competition.”
Stitch Fix was early in the rush to AI and has been using it to add features that make use of the new tools available and sync up with the company’s long-standing and highly personalized business model.
“With Stitch Fix Vision, when you see your likeness dressed head-to-toe in Stitch Fix apparel and accessories, everything in that image will align to your style preferences, will be within your budget, and when those items arrive in your home, they’ll also fit,” Baer said. “The quality of an AI experience is rooted in the quality of the data that goes into it, and our superior lead there is one we will continue to lean into as we continue to disrupt the apparel retail industry.”
For the full year, Stitch Fix forecast that revenues would increase in a range of 5 to 6.5 percent, producing adjusted EBITDA of $42 million to $50 million.
That moves up the company’s profitability forecast, which in December saw adjusted EBITDA of $38 million to $48 million for the year.
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