In This Article:
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Net Revenue: $318.8 million, down 13% year over year, flat quarter over quarter.
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Adjusted EBITDA: $13.5 million, approximately 4.2% margin, up 180 basis points year over year.
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Gross Margin: 45.4%, up 180 basis points year over year.
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Contribution Margin: Approximately 34%.
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Net Active Clients: 2.4 million, down 19% year over year.
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Revenue per Active Client: $531, up 5% year over year.
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Free Cash Flow: $9.9 million.
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Cash and Investments: $253 million, with no debt.
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Inventory: $119.1 million, down 26% year over year.
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Advertising Expense: 9.4% of revenue, up 120 basis points year over year.
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Q2 Revenue Guidance: $290 million to $300 million.
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Q2 Adjusted EBITDA Guidance: $8 million to $13 million.
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Full Year Revenue Guidance: $1.14 billion to $1.18 billion.
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Full Year Adjusted EBITDA Guidance: $25 million to $36 million.
Release Date: December 10, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Stitch Fix Inc (NASDAQ:SFIX) exceeded expectations in Q1 with net revenue of $318.8 million, marking a 570 basis point improvement in year-over-year comps.
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The company delivered an adjusted EBITA of $13.5 million and improved its contribution margin to approximately 34%.
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Stitch Fix Inc (NASDAQ:SFIX) is on track to return to revenue growth by the end of FY26 and has raised its annual guidance.
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The introduction of more personalized marketing and engagement tactics has increased client visits and driven sales across both fixed and freestyle channels.
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The company's new private label brands, The Commons and Montgomery Post, have shown encouraging early results, with The Commons becoming a top 10 brand for men under 40.
Negative Points
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Q1 net revenue was down 13% year over year, and the active client count decreased by 19% year over year.
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Net active clients ended the quarter at 2.4 million, representing the lowest sequential decline in active client count in two years.
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Advertising expenses increased, coming in at 9.4% of revenue, up 120 basis points year over year.
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The company expects Q2 to be free cash flow negative due to the timing of working capital requirements related to inventory purchases.
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Despite improvements, Stitch Fix Inc (NASDAQ:SFIX) acknowledges that it still has work to do in terms of inventory management and client engagement.
Q & A Highlights
Q: Can you discuss the key contributors to the stronger than expected spend per client this quarter and the sustainability of these dynamics going forward? A: Matt Baer, Chief Executive Officer, explained that the increase in spend per client was driven by improvements in inventory and assortment, including a higher penetration of newness and seasonal inventory. The flexibility in the fix offering and pricing architecture adjustments also contributed. Baer emphasized the sustainability of these efforts, noting ongoing improvements in inventory and pricing strategies. David Aufderhaar, Chief Financial Officer, added that the fix average order value (AOV) was up 6% year over year, driven by early seasonal transitions and the new Flex Fix offering.