On September 24, 2024, Stitch Fix Inc (SFIX, Financial) released its 8-K filing announcing its financial results for the fourth quarter and full fiscal year 2024, which ended on August 3, 2024. The company, known for its personalized styling services, reported results that met or exceeded its guidance on both the top and bottom lines.
Company Overview
Stitch Fix Inc offers personal style services for men and women, combining data science and human judgment to deliver personalized shipments of apparel, shoes, and accessories. The company provides a service called A FIX, where stylists hand-select items based on client preferences and data analysis. Stitch Fix offers products across various categories, including Women's, Petite, Maternity, Men's, and Plus, and sells merchandise at different price points.
Performance and Challenges
Stitch Fix Inc reported net revenue of $319.6 million for Q4 2024, a 12.4% decrease year-over-year, or an 18.3% decrease when adjusted for the extra week in Q4 2023. Despite the revenue decline, the company achieved a gross margin of 44.6%, up 50 basis points year-over-year, reflecting improved transportation leverage. The net loss for the quarter was $35.7 million, translating to a diluted loss per share of $0.29.
For the full fiscal year 2024, Stitch Fix Inc reported net revenue of $1.34 billion, a 16.0% decrease year-over-year, or a 17.4% decrease when adjusted for the extra week. The company faced challenges with a decrease in active clients, which fell by 19.6% year-over-year to 2.51 million. However, net revenue per active client increased by 4.5% to $533.
Financial Achievements
Despite the challenges, Stitch Fix Inc managed to achieve several financial milestones. The company reported an adjusted EBITDA of $9.5 million for Q4 2024, reflecting continued cost management discipline. Free cash flow for the quarter was $4.5 million, and the company ended the quarter with $247.0 million in cash, cash equivalents, and investments, with no debt.
For the full fiscal year, Stitch Fix Inc reported an adjusted EBITDA of $29.3 million and free cash flow of $14.2 million. These achievements are significant for a company in the retail-cyclical industry, as they indicate effective cost management and operational efficiency.
Key Financial Metrics
| Metric | Q4 2024 | Q4 2023 | FY 2024 | FY 2023 |
|---|---|---|---|---|
| Net Revenue | $319.6 million | $364.7 million | $1.34 billion | $1.59 billion |
| Gross Margin | 44.6% | 44.1% | 44.3% | 42.4% |
| Net Loss | $35.7 million | $20.3 million | $118.9 million | $150.3 million |
| Adjusted EBITDA | $9.5 million | $13.1 million | $29.3 million | $30.9 million |
| Free Cash Flow | $4.5 million | N/A | $14.2 million | N/A |
Analysis and Outlook
The financial results indicate that Stitch Fix Inc is navigating its transformation strategy effectively, despite a challenging retail environment. The increase in gross margin and positive free cash flow are promising signs of operational efficiency. However, the decline in active clients remains a concern that the company needs to address to return to revenue growth.
Looking ahead, Stitch Fix Inc has provided a financial outlook for Q1 2025, expecting net revenue between $303 million and $310 million, representing a year-over-year decline of 15% to 17%. The company also anticipates an adjusted EBITDA between $5 million and $9 million, indicating a margin of 1.7% to 2.9%.
Overall, while Stitch Fix Inc faces challenges, its disciplined execution of its transformation strategy and focus on cost management provide a solid foundation for future growth.
Explore the complete 8-K earnings release (here) from Stitch Fix Inc for further details.
