Stitch Fix (SFIX -1.79%) is slated to report its results for the fourth quarter and full year of fiscal 2021 (which ended July 31) after the market close on Tuesday, Sept. 21.
Be prepared for volatility. Shares of the online personalized apparel retailer tend to make big moves following the release of quarterly results. Last quarter, the stock surged 14.1% the day after results were announced, and it plunged 28.2% following the release of the prior quarter's results.
Stitch Fix stock is up 23.9% over the one-year period through Sept. 14. For context, the S&P 500 has returned 33.3% and shares of athletic clothing-focused retailer Lululemon Athletica (LULU 0.77%) have gained 34% over this period. (A stock chart follows below.)
Here's what to watch in Stitch Fix's upcoming report.
Image source: Getty Images.
Key quarterly numbers
| Metric | Fiscal Q4 2020 Result | Stitch Fix's Fiscal Q4 2021 Guidance | Wall Street's Fiscal Q4 2021 Consensus Estimate | Wall Street's Projected Change (YOY) |
|---|---|---|---|---|
|
Revenue |
$443.4 million |
$540 million to $550 million |
$547.9 million |
24% |
|
Earnings per share |
($0.44) |
N/A |
($0.13) | N/A. Loss expected to narrow 70%. |
Data sources: Stitch Fix (year-ago results) and Yahoo! Finance (estimates). Fiscal Q4 period ended on July 31. YOY = year over year. Note: Stitch Fix doesn't provide earnings guidance.
Stitch Fix has easy comparables. It had weak results in the year-ago period, as did many consumer discretionary companies, because that was the first quarter fully impacted by the pandemic. In that period, revenue rose 3% year over year (or 11% when adjusted for the difference in the number of weeks in the quarters) and net loss was $44.5 million, compared to net income of $7.2 million in the year-ago period.
Last quarter (essentially the February-to-April period), Stitch Fix's sales jumped 44% year over year to $535.6 million, easily topping the $510.6 million Wall Street consensus estimate, as well as the company's guidance of $505 million to $510 million. Its net loss narrowed 45% to $18.8 million, or $0.18 per share, sailing by the loss per share of $0.27 analysts had expected.
Cash flows
Investors should focus on cash flows in addition to the usual accounting-based key metrics. Stitch Fix has been eating up a lot of cash running its operations. Last quarter, it used $40.7 million operating its business. It ended last quarter with $222.9 million in cash and cash equivalents. In other words, at last quarter's operating cash-burn rate, its cash position would last about 5.5 quarters.
Data by YCharts. (Last week, Lululemon -- whose stock I favor -- posted stellar results for fiscal Q2, which ended on Aug. 9, with year-over-year revenue and adjusted EPS soaring 61% and 123%, respectively.)
Key customer metrics
Investors should continue to focus on the two key metrics driving revenue growth: total number of active clients and average annual revenue per client. Stitch Fix defines an "active client" as a customer who has bought at least one item from it in the last 52 weeks.
Last quarter, the number of active clients increased 20% year over year to 4.1 million. Average net annual revenue per client fell 3% year over year to $481.
Guidance for the fiscal first quarter
The market's reaction to the earnings release will probably hinge more on Stitch Fix's guidance than on its fiscal Q4 results. Investors should expect management to provide an outlook for the first quarter of fiscal 2022. Whether or not it provides full-year guidance at this time remains to be seen.
For fiscal Q1 (essentially the August-to-October period), Wall Street is modeling for revenue to rise 21% year over year to $591.6 million and expects a loss of $0.14 per share compared to earnings per share of $0.09 in the year-ago period.
