Stitch Fix (SFIX) Up 26.9% Since Last Earnings Report: Can It Continue?

Core Insights - Stitch Fix's recent earnings report showed a narrower adjusted loss of 12 cents per share, beating the Zacks Consensus Estimate of a 19 cents loss, and an improvement from the previous year's loss of 19 cents [3] - The company's net revenues for Q4 were $319.6 million, surpassing the Zacks Consensus Estimate of $317 million, but reflecting a 12.4% decline year-over-year due to a decrease in active clients [3] - Active clients decreased by 19.6% year-over-year to 2,508,000, while average net revenues per active client increased by 4.5% to $533 [3] Financial Performance - Gross profit declined by 11.4% to $142.5 million, but gross margin improved by 50 basis points to 44.6% due to better transportation leverage [4] - Selling, general and administrative expenses rose by 0.3% to $184.4 million, with SG&A as a percentage of net revenues increasing to 57.7% [4] - Adjusted EBITDA for the quarter was $9.5 million, down from $13.1 million in the prior year, indicating ongoing cost management efforts [4] Cash and Equity Position - At the end of Q4, Stitch Fix had cash and cash equivalents of $162.9 million, short-term investments of $84.1 million, and no debt, with net inventory at $97.9 million [5] - The company reported net cash provided by operating activities of $28.2 million and free cash flow of $4.5 million [5] Future Guidance - For Q1 FY25, revenues are expected to be between $303 million and $310 million, indicating a 15-17% year-over-year decline, with adjusted EBITDA projected between $5 million and $9 million [6] - The full-year revenue guidance is between $1.11 billion and $1.16 billion, reflecting a 12-16% year-over-year decline, with total adjusted EBITDA expected between $14 million and $28 million [7] - The company anticipates stable gross margins between 44% and 45% and plans to manage inventory levels carefully throughout the fiscal year [6][7] Market Sentiment - Recent estimates for Stitch Fix have trended upward, with a consensus estimate shift of 34.62% [8] - The stock currently holds a Zacks Rank 3 (Hold), indicating expectations for an in-line return in the coming months [10] - Stitch Fix has a strong Growth Score of A and a Momentum Score of A, with an aggregate VGM Score of A, suggesting positive market sentiment [9]