by Ian Harvey
December 10, 2019
Stitch Fix reported earnings after the market closed yesterday; and rallied more than 11% after the market closed due to better-than-expected financial results.
“Stock Options Made Easy” members are already profiting from a call option, but will expect more when the market opens today!
Find out how high SFIX share price will go!
The online personalized styling service company shares rose more than 11% in after-hours trading Monday after the online personal-styling service reported first-quarter results that exceeded analysts' estimates.
Stitch Fix reported a loss of $178,000, or 0 cents a share, compared with net income of $10.7 million, or 10 cents, in the year-ago period; but beating analysts’ estimates by 6 cents per share.
Revenue grew 21% to $444.8 million from $366.2 million a year ago; above the high end of its guidance range of $438 million to $442 million. Street consensus had been $441 million.
Also, Stitch Fix said active clients increased 16.6% year over year to 3.4 million. Net revenue per active client was $485, up 9.5% from a year earlier.
“We had another quarter of great momentum in Q1, delivering net revenue of $445 million, exceeding guidance and representing 21% year-over-year growth,” Stitch Fix founder and CEO Katrina Lake said in a statement.
“We grew our active clients to 3.4 million, an increase of 17% year over year. Demonstrating the power of our data science, we continued to delight our clients, growing revenue per active client by 10% year over year, our sixth consecutive quarter of growth."
This quarterly report represents an earnings surprise of 100%. A quarter ago, it was expected that this online clothing styling service would post earnings of $0.04 per share when it actually produced earnings of $0.07, delivering a surprise of 75%.
Over the last four quarters, the company has surpassed consensus EPS estimates four times.
Stitch Fix shares have added about 46.4% since the beginning of the year versus the S&P 500's gain of 25.5%.
YOU NEED TO BE IN TO PROFIT!
For the second quarter, Stitch Fix is projecting revenue of $447 million to $455 million, adjusted Ebitda of $10 million to $15 million, and adjusted Ebitda excluding stock-based compensation of $28 million to $33 million. The revenue forecast range is a little below the Street consensus at $456.5 million.
For the full year, Stitch Fix continues to project revenue of $1.9 billion to $1.93 billion. The company increased its forecast for adjusted Ebitda to a range of $18 million to $32 million, up from a previous range of $10 million to $30 million.
The majority of Wall Street analysts have buy ratings on the stock; and hedge funds now account for 28% of outstanding shares, up from 23% at the start of the year.
“As a market share gainer and product innovator leveraging personalization, SFIX is strengthening its position within apparel, making it increasingly defensible,” wrote SunTrust Robinson Humphrey analyst Youssef Squali. He has a buy rating on the stock.
The company also announced that CFO Paul Yee “has decided to leave the company to pursue other career opportunities,” and that it has hired Elizabeth Spaulding to join the company as President, reporting to CEO Katrina Lake. Spaulding has been global head and founder of Bain & Co.’s digital practice.
The company said current President and COO Mike Smith will lead the
finance team on an interim basis while the board searches for a new CFO.
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The questions remain......How high will Stitch Fix shares Go?
When will members exit the options trade?
Will we recommend another options trade on Stitch Fix?
What will “Stock Options Made Easy” advise members to do?
AS ALWAYS THE DECISION IS YOURS!
An Important Note: That any suggestions for options trade considerations require investors/traders to use their own discretion as to when to enter or exit! As well, it is advisable to do further research and due diligence before executing your trade.
It is sometimes best to exit a trade, if there is already sufficient profit accrued, before an earnings report is presented. GREED can be the undoing of a nice profit!