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Why Shares of Stitch Fix Are Up Today

By John Rosevear - Mar 19, 2020 at 3:37PM

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Last week's "disappointing" guidance now looks pretty good.

What happened

Shares of Stitch Fix (SFIX 1.08%) were moving up on Thursday afternoon, as investors looking for retail bargains began snapping up the company's beaten-down shares. 

As of 3:30 p.m. EDT, Stitch Fix's shares were up about 14% from Wednesday's closing price. 

So what

Stitch Fix's shares have had a rough week and a half. Shares fell sharply after the company's earnings report on March 9, as revenue and guidance both fell short of Wall Street's expectations. 

A woman carrying a Stitch Fix box.

Image source: Stitch Fix.

But what looked bad a week and a half ago doesn't look quite so bad now. Shares of brick-and-mortar retailers have been hammered in recent days as investors have come to terms with the disruptions caused by the coronavirus pandemic. 

As consumers heeded health authorities' advice to stay home, retail store traffic fell sharply in the first half of March -- and now many apparel stores have shut their doors for at least the next few weeks.

What does that have to do with Stitch Fix? 

Now what

First of all, the company's guidance now looks pretty good in light of what seems likely to happen with its brick-and-mortar competitors. Second, the thinking is that consumers stuck at home for the duration might give Stitch Fix's offerings a try. It's possible that the company could gain sales during the pandemic. 

Long story short: Last week's disappointing guidance might be next quarter's upbeat surprise. 

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