Stitch Fix (NASDAQ:SFIX) has mostly missed out on the market rally in recent weeks.

After a disappointing earnings report in March, shares of the personalized online styling service hovered near all-time lows for several weeks, but the stock has suddenly picked up momentum over the past couple of weeks. Shares rose as much as 58% from May 4, peaking at $24.10 on May 15.

There's been no clear reason for the gains. Stitch Fix hasn't made any announcements. It hasn't gotten any analyst upgrades, and there's been little macroeconomic news that would affect it, other than the slow reopening of states.

However, e-commerce sales have been booming. Nearly every e-commerce stock has been setting record highs in recent weeks, including Amazon, ShopifyEtsy, and Wayfair, in spite of the broader market malaise. All of these companies have seen a spike in sales as consumer demand has shifted to the online channel, with so many stores closed across the country and shoppers afraid to venture into public spaces. Nonstore retailers, made up of mostly online sales, jumped 21.4% in April from a year ago, according to data from the Census Bureau. 

Stitch Fix, despite being a pure-play, e-commerce stock, has missed out on that rally as shares are still down more than half from their all-time high. Investors have fled apparel stocks as the industry is in the middle of an unprecedented catastrophe. Not only were stores forced to close because of the pandemic, disrupting ordering and regular inventory rotation, but Americans have little need for new clothes while they're working from home, and social occasions are banned. Sales at clothing stores plunged 89% in April, and that shock is already forcing a reckoning in the industry with J.Crew, Neiman Marcus, and Stage Stores having declared bankruptcy, and J.C. Penney on the verge of it.

There are some signs that apparel sales are still gaining online, however. A report from Adobe Analytics showed that online apparel sales actually rose 34% in April even as prices fell 12%.  That's a result of brick-and-mortar stores flooding the online channel with discounts, as they have inventory they need to move, especially seasonal items. However, there's some evidence online-only apparel retailers are sharing in those gains.  

Farfetch (NYSE:FTCH), an online luxury-apparel retailer, said sales jumped 90% in the first quarter to $331 million, outpacing expectations, and digital gross merchandise volume was on track to be higher than last year, though it did not provide specific guidance.  

On the other hand, Revolve Group (NYSE:RVLV), an influencer-baser online apparel retailer, saw headwinds when the COVID-19 pandemic started. In its first-quarter report, the company said revenue increased by more than 20% in January and February but then declined significantly in the end of March as the pandemic hit. However, sales have been positive year over year over the last four weeks, showing it's recovered from the initial setback.  

A closet featuring Stitch Fix clothes.

Image source: Stitch Fix.

Are Stitch Fix's sales booming?

A pattern seems to have emerged with Americans' spending habits while stay-at-home orders have been in effect. At first, Americans were focused on stockpiling essentials like food, cleaning supplies, and medicine, and forewent non-essential spending, as the shock of the shutdowns forced them to rearrange their lives. However, in April, boredom gradually set in, and Americans began to resume more of their regular spending habits, shopping online for things like home goods, exercise equipment, and distractions likes games and puzzles, as well as getting takeout from fast-food restaurants.

It's unlikely that Stitch Fix's sales have suddenly boomed over the past few weeks. The company faces competition offering steep discounts online, and consumers still have little incentive to shop for new clothes, given that work-from-home policies are still in effect across the country, and events like weddings don't seem to be happening anytime soon. Boredom may have driven some traffic to the site, but the best-use case for Stitch Fix under ordinary circumstance is from customers who need to refresh their wardrobes or need clothes for a specific reason but don't have a lot of time to shop on their own. That seems less likely during the pandemic.

Still, over the long term, the company should emerge as a winner in the apparel space. It has no exposure to brick-and-mortar retail and no debt, making it among the most resilient companies in an industry enduring a disastrous era. Even two of its top personalized styling competitors, Trunk Club and Le Tote, are tied to brick-and-mortar retailers -- Nordstrom and Lord & Taylor, respectively -- giving Stitch Fix an edge over them.

There's likely to be massive fallout among brick-and-mortar apparel retailers with more bankruptcies following the recent filings. The percentage of sales going to e-commerce will accelerate, and that pattern will stick around after the pandemic is over as long-term trends favor e-commerce.

Demand for clothes will eventually bounce back as Americans return to their normal lives, and Stitch Fix will be ready and waiting with less competition. Long term, the company will come out as a winner from the crisis, but it's too early to declare victory.