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Can Stitch Fix Go Even Higher After Earnings?

By Matthew Frankel, CFP® and Brian Withers - Feb 5, 2021 at 7:11AM

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Stitch Fix has performed very well since the pandemic hit -- but how much higher could it go?

Stitch Fix (SFIX -0.81%) has surprised investors by being more resilient than expected during the COVID-19 pandemic. However, there's reason to believe that we could still see more growth ahead.

In this Fool Live video clip recorded on Jan. 25, 2021, contributors Brian Withers and Matt Frankel, CFP, discuss why Stitch Fix has performed so well and what investors should keep an eye on going forward.

Brian Withers: Stitch Fix is a little bit of some people love it and some people hate it. It's at an all-time high it rocketed up after Q4 earnings or earnings in November, early December. Management came out and was very positive about all of the trends that they're seeing. What's the cool thing that they're doing is they're really haven't stuck with their original fix. They've innovated, and they've figured out and they've gotten feedback from customers and they figured out how to do it even better. In the U.K., they're trying a program where their clients can click into the fix once it's pre-selected, and they can choose whether they want any of those five items to be sent or not sent, and then they'll refill it up. So one, it gives the clients more feedback into the fix without having the shipment happen. It's going to save Stitch Fix a bunch of money in freight back-and-forth and as well, I think you're going to have higher client satisfaction and higher wallet share because of that. I can't wait for this to get rolled out. Earnings won't rollout until early March. The biggest thing for watching Stitch Fix is their sequential active customer growth numbers. The last four quarters were plus 1.4%, minus 1.4%, plus %. Then last quarter was plus 6.8%. I'd love to see them put another win on the board with a high single-digit growth number or even if it hits double-digits, the stock's going to shoot through the moon.

Matt Frankel: I would agree with that. Stitch Fix has really surprised me this year. Just how resilient the business has been. I think it's surprised a lot of people, I think that's why it was trading for $14 a share or whatever in March and April. I think it's surprised a lot of people.

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