Stitch Fix's Q2 Loss Narrower Than Expected, Fiscal 2025 View Raised

Stitch Fix, Inc. SFIX reported second-quarter fiscal 2025 results, wherein both top and bottom lines beat the Zacks Consensus Estimate. The top line deteriorated from the year-earlier quarter. Meanwhile, the bottom line fared better year over year. The company raised its fiscal 2025 view. As a result, shares of SFIX rose 19.4% during the after-market trading session yesterday.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.Stitch Fix's strategic initiatives focus on transforming client experience and driving growth through multiple key improvements. The company has enhanced its assortment with trend-driven styles, leveraged AI-powered inventory management and strengthened client-stylist relationships, leading to higher adoption rates and improved retention. Investments in the Freestyle direct e-commerce platform, category expansion into non-apparel items and flexible Fix options have contributed to higher average order values and engagement. Moreover, Stitch Fix has optimized marketing strategies, introduced stylist profiles and implemented advanced personalization tools, all of which have helped drive year-over-year growth in men's and Freestyle businesses while working toward overall revenue growth in fiscal 2026.Stitch Fix, Inc. Price, Consensus and EPS Surprise Stitch Fix, Inc. price-consensus-eps-surprise-chart | Stitch Fix, Inc. QuoteMore on Stitch Fix’s Q2 ResultsStitch Fix reported an adjusted loss of 5 cents per share, narrower than the Zacks Consensus Estimate of an adjusted loss of 11 cents. The metric was also narrower than the loss of 21 cents reported in the year-ago quarter.SFIX recorded net revenues of $312.1 million, which surpassed the Zacks Consensus Estimate of $295 million. However, the metric declined 5.5% from the year-ago quarter due to lower net active clients.The number of active clients engaged in ongoing operations was 2,371,000, marking a year-over-year decline of 15.5%. The average net revenues generated per active client from ongoing operations were $537, representing an increase of 4.3% from the previous year.Insight Into SFIX’s Margins & ExpensesIn the fiscal second quarter, this Zacks Rank #3 (Hold) company’s gross profit declined 3.2% to $138.9 million from $143.5 million in the year-ago period. However, the gross margin expanded 110 basis points (bps) year over year to 44.5%, supported by higher average order values and improved product margins. We expected the gross profit to decline 8.7% year over year to $130.9 million. Selling, general and administrative expenses (SG&A) declined 18.5% from $181.5 million in the prior-year quarter to $147.9 million. SG&A expenses, as a percentage of net revenues, were 47.4%, down 750 bps from 54.9% in the prior-year quarter. Advertising was 7.8% of net revenues, down 160 bps year over year. We anticipated SG&A expenses to decline 17.7% year over year.Stitch Fix reported an adjusted EBITDA of $15.9 million compared with $4.4 million in the year-ago quarter, reflecting its ongoing cost-management discipline. We note that the adjusted EBITDA margin improved 380 bps year over year to 5.1% in the quarter under review.SFIX’s Financial Snapshot: Cash, Inventory & Equity OverviewThe company ended the fiscal second quarter with cash and cash equivalents of $113.2 million, short-term investments of $105.9 million, no debt, net inventory of $109.6 million and shareholders’ equity of $197.8 million.The net cash used in operating activities from continuing operations was $1.9 million and the free cash outflow was $19.4 million.SFIX Stock Past-Three Month PerformanceImage Source: Zacks Investment ResearchStitch Fix’s FY25 GuidanceFor the third quarter of fiscal 2025, Stitch Fix anticipates revenues to be between $311 million and $316 million, indicating a 3.6-2.1% year-over-year decline. Adjusted EBITDA is expected to be in the range of $7-$10 million, indicating a margin of 2.3-3.2%. The gross margin is projected to remain steady between 44% and 45% for both the fiscal third quarter and the fiscal full year, with advertising expenses constituting approximately 8-9% of revenues. SFIX expects fiscal 2025 total revenues to be between $1.23 billion and $1.24 billion compared with the previous guidance of $1.14-$1.18 billion. The company is now projecting total adjusted EBITDA to be between $40 million and $47 million with a margin of 3.3-3.8%, up from the prior estimate of $25-$36 million. SFIX stock has gained 7.9% in the past three months against the industry’s 22.5% decline.Stocks to ConsiderSome better-ranked stocks are Boot Barn Holdings, Inc. BOOT, Deckers Outdoor Corporation DECK and lululemon athletica inc. LULU.Boot Barn is a specialty retailer of premium, high-quality casual apparel. It sports a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Boot Barn’s fiscal 2025 earnings and revenues indicates growth of 21.4% and 14.9%, respectively, from the levels of fiscal 2024. BOOT delivered a trailing four-quarter average earnings surprise of 7.2%.Deckers is a leading designer, producer and brand manager of innovative, niche footwear and accessories. It currently carries a Zacks Rank #2 (Buy).The Zacks Consensus Estimate for DECK’s fiscal 2025 earnings and revenues implies growth of 21% and 15.6%, respectively, from the year-ago actuals. DECK delivered a trailing four-quarter average earnings surprise of 36.8%.lululemon is a yoga-inspired athletic apparel company that creates lifestyle components. It has a Zacks Rank of 2 at present. LULU delivered a 6.7% earnings surprise in the last reported quarter. The consensus estimate for lululemon’s fiscal 2025 earnings and revenues indicates growth of 12.5% and 9.7%, respectively, from the fiscal 2024 reported levels. LULU delivered a trailing four-quarter average earnings surprise of 6.7%.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Deckers Outdoor Corporation (DECK): Free Stock Analysis Report lululemon athletica inc. (LULU): Free Stock Analysis Report Boot Barn Holdings, Inc. (BOOT): Free Stock Analysis Report Stitch Fix, Inc. (SFIX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks