Stitch Fix (SFIX -1.79%) 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.
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.
