Stitch Fix forecast sinks stock, as CEO says 'there is a lot of work' for turnaround

By Bill Peters

Stitch Fix is trying to make its styling service more 'fun and visual' amid subdued clothing demand

Shares of Stitch Fix Inc. fell after hours on Tuesday after the online styling service forecast quarterly and full-year sales that were weaker than expected, saying that there was "a lot of work still to do" to turn the company around.

Stitch Fix (SFIX) said it expects fiscal first-quarter sales of $303 million to $310 million, below FactSet forecasts for $319 million. For its full fiscal year, which runs through July, Stitch Fix sees sales of $1.11 billion to $1.16 billion. FactSet estimates called for $1.31 billion.

Shares dropped 23.2% after hours on Tuesday.

As of the market close on Tuesday, shares of Stitch Fix were still up 7.1% over the past year. But the company, as with others in the clothing industry, has struggled with weaker demand, as shoppers prioritize more essential - but also more expensive - items like groceries.

Against that backdrop, Stitch Fix is trying to make the service more "fun and visual." It is also trying to take steps to strengthen the relationship between the people who have clothing sent from Stitch Fix to their doorsteps and the company's stylists who help shoppers select their wardrobes.

The company has ended its U.K. operations. Last year, it cut staff and appointed Matt Baer, a Macy's Inc. (M) veteran, as its new chief executive.

"While there is a lot of work still to do, I am confident we are on the right path to continue to improve the trajectory of our business, which includes returning to revenue growth by the end of FY26," Baer said in a statement on Tuesday.

For its fiscal fourth quarter, Stitch Fix said sales fell 12.4% year over year to $319.6 million. It reported a net loss of $36.5 million, or 29 cents a share, compared with $28.7 million, or 17 cents a share, in the same quarter last year.

Analysts polled by FactSet expected a net loss of 21 cents a share, on revenue of $318 million.

-Bill Peters

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09-24-24 2010ET

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