Online personal styling service Stitch Fix posted a surprise jump in revenue growth and profit for the fiscal first quarter. Stitch fix uses recommendation algorithms and data science to personalize clothing items based on size, budget and style. The company lets you try on clothes, to keep or to send back, on a subscription basis.
It has been a beneficiary of lockdown restrictions, growing its base of active clients 10.2% to 3.8 million subscribers from a year ago. 241,000 of those clients were added this past quarter. Revenue rose 10% quarter-on-quarter and year-on-year to $490 million. Net revenue per active client fell 4% to $467 per user. Gross margins remained stable at 45%. SG&A expenses ticked-up in the period to 49% of net revenues. Adjusted EBITDA fell 58.8% to $6.85 million. The company had a surprise profit of $9.5 million (or $0.09 share) from a $178,000 loss a year ago as the company’s cash position improved 40% to $200 million.
It is impressive that at a time in the apparel industry when traditional bricks and mortar retailers are exhibiting financial distress or shutting doors that Stitch Fix was able to continue to grow revenues by double digits. The company says its matching algorithm delivered a record success rate across its business in the quarter, as fewer items recommended by the styling service were returned. Stitch Fix said, given its recent momentum, it expects revenue to grow between 20% and 25% in fiscal 2021. The company also announced the appointment of Dan Jedda, former VP and CFO of digital video at Amazon, as its new CFO. Shares of Stitch Fix are up 136% year-to-date and 66% since these results were released earlier this week bringing its market cap to $6.2 billion.