Stitch Fix revenue suffers from coronavirus-related order backlog
Despite its digital focus, fulfillment delays meant that personal styling service Stitch Fix still felt the negative impact of the Covid-19 pandemic, reporting a 9% decline in net revenue in Q3. The San Francisco-based company is nonetheless optimistic for the future.
For the third quarter ended May 2, 2020, Stitch Fix announced net revenue of $371.7 million, down from $408.9 million in the same period in the previous year.
According to the company, by the end of March it had lost 70% of its warehouse capacity due to coronavirus-related closures, leading to a backlog of orders. Stitch Fix aims to have eliminated this backlog by the end of June.
During the third quarter, the platform’s active client based expanded 9% year over year to 3.4 million, with net revenue per active client increasing 6% to $498.
Stitch Fix’s quarterly net loss came to $33.9 million, or $0.33 per diluted share, falling from income of $7.0 million, or $0.07 per diluted share, in the prior-year period.
The platform’s results therefore disappointed Wall Street analysts, who had forecast that the company would report a loss of $0.15 per share on revenue of $418.2 million, according to FactSet figures cited by MarketWatch.
However, Stitch Fix founder and CEO Katrina Lake was keen to put a positive spin on the company’s performance and highlight its prospects for the coming months.
“In a time period where the broader apparel and accessories market saw sales decline 80%, we delivered $372 million in net revenue and expect a return to positive growth in Q4,” she said in a release. “We believe our business model and balance sheet uniquely position us to thrive in retail’s next era, and we’re excited to demonstrate that in the quarters ahead.”
Year to date, Stitch Fix’s net revenue totaled $1.27 billion, increasing 11% from $1.15 billion in the first nine months of fiscal 2019. The company’s net loss for the period, however, was $22.7 million, or $0.22 per diluted share, down from income of $29.7 million, or $0.29 per diluted share.
Earlier this month, the platform announced that it will be cutting around 1,400 jobs in California in order to invest in lower-cost locations such as Dallas, Minneapolis and Austin, Texas, areas where the company plans to hire approximately 2,000 new stylists.
Stitch Fix did not provide financial guidance for the fourth quarter or full fiscal year 2020.
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