Please ensure Javascript is enabled for purposes of website accessibility

Stitch Fix Earnings Preview: What to Watch on Monday After the Market Close

By Beth McKenna - Mar 9, 2020 at 7:26AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Stitch Fix stock has plunged 22% during the coronavirus sell-off, so the online personalized styling service could really use a fiscal Q2 earnings beat.

Stitch Fix (SFIX -8.18%) is slated to report its second-quarter results for fiscal 2020 after the market closes on Monday, March 9. A conference call with analysts is scheduled to follow at 5 p.m. EDT.

The online personalized apparel retailer is going into its report on a mixed note. On the positive side, last quarter, it beat Wall Street's consensus estimates for both the top and bottom lines. That resulted in the stock popping 4.8% the next day. 

On the negative front, Stitch Fix stock has taken a particularly tough beating during the recent coronavirus-driven market sell-off. Shares have plunged 22.4% over the two-week period through Friday, March 6, compared with the S&P 500 index's 11% drop over this period. We can attribute this largely to concerns that the spread of COVID-19 will slow U.S. and global economic growth and hurt Stitch Fix's sales.

In 2020, shares are down 11.2% through March 6, while the broader market (including dividends) has fallen 7.7%.

Here's what to watch when Stitch Fix reports.

Close-up of a Stitch Fix package leaning against a bright yellow door surrounded by white trim.

Image source: Stitch Fix.

Key numbers

Metric Fiscal Q2 2019 Result Stitch Fix's Fiscal Q2 2020 Guidance Stitch Fix's Projected Change (YOY) Wall Street's Fiscal Q2 2020 Consensus Estimate Wall Street's Projected Change (YOY)

Revenue

$370.3 million

$447 million to $455 million

21% to 23%

$452.5 million

22.2%

Adjusted earnings per share (EPS)

$0.12

N/A

N/A

$0.06

($0.50)

Data sources: Stitch Fix and Yahoo! Finance. YOY = year over year. Note: Stitch Fix doesn't provide earnings guidance.

Stitch Fix's year-over-year earnings are expected to continue to move lower. That's because the company has been investing in growth initiatives. It's typical for companies to scale up rapidly following their initial public offerings (IPOs). Stitch Fix went public in November 2017.

Key customer metrics

Investors will want to continue to focus on growth in the total number of clients and the average annual revenue per client.

Last quarter, Stitch Fix grew revenue 21.5% year over year. That growth was driven by a 16.6% jump in the number of active clients, to 3.4 million, plus a 9.5% increase in the average net annual revenue per client, to $485. Adjusted for the quarter's extra week relative to the year-ago period, net revenue per client rose about 7.5% year over year. 

Third-quarter and full-year fiscal 2020 guidance 

The market is a forward-looking machine. Therefore, its reaction to Stitch Fix's upcoming report will probably hinge more on the company's outlook than on its results for the second quarter, relative to expectations. (Stitch Fix provides an outlook for revenue but not for earnings.) 

So, you should know that for Q3, Wall Street is modeling for revenue to jump 23.8% year over year to $506.2 million, and expects the company to post a loss per share of $0.02, compared with earnings per share of $0.07 in the year-ago period.

For the full year, Stitch Fix previously guided for revenue of $1.90 billion to $1.93 billion, which represents growth of 23% to 25% year over year, adjusted for the extra week in fiscal 2019 relative to fiscal 2020.

In the midst of the market's coronavirus sell-off, expect Stitch Fix stock to get slammed if the company's Q3 revenue outlook is weaker than expected or if it pares back its full-year revenue guidance. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

StitchFix Stock Quote
StitchFix
SFIX
$4.94 (-8.18%) $0.44

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
317%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.