Stitch Fix shares crater as revenue, active clients miss estimates

Key Points
  • Stitch Fix said active clients rose 25 percent to 2.7 million from a year ago, but that was short of analysts' estimates.
  • Fiscal fourth-quarter revenue climbed 23 percent from the same period last year to $318.3 million, but also missed analysts' estimates.
  • The online personal styling service also announced its expansion into the U.K.
Stitch Fix EPS beats, though the stock is seeing downward pressure

Stitch Fix shares tanked as the number of active users for its online personal styling service fell short of estimates in the fiscal fourth quarter, the company said after the bell on Monday.

Its stock was still tumbling more than 20 percent in premarket trading on Tuesday, following a huge runup so far this year. As of Monday's market close, Stitch Fix shares have climbed more than 70 percent in 2018. The online styling service just went public last November.

While its quarterly revenue missed analysts' expectations, earnings came out on top. Stitch Fix said net income for the period ended July 28 was $18.2 million, or 18 cents a share, compared with a loss of $4.5 million, or losses of 18 cents a share, one year ago. Analysts were calling for earnings per share of 4 cents, based on a survey by Thomson Reuters.

Revenue climbed 23 percent from the same period last year to $318.3 million, short of the $319 million that analysts were expecting. Stitch Fix had been calling for sales to fall within a range of $310 million to $320 million.

Stitch Fix said active clients grew 25 percent from a year ago to 2.7 million by the end of the fiscal fourth quarter, while analysts were calling for 2.81 million, according to StreetAccount.

Stitch Fix also on Monday announced its expansion into the U.K., which is expected to happen by the end of next year.

"We believe our ability to create a uniquely personalized shopping experience is something that will resonate with consumers and brands outside of the U.S.," CEO Katrina Lake said in a statement.

In the previous quarter, the company announced it would be rolling out a version of its online styling service for kids. The company has been looking for ways to diversify its sources of revenue while managing investments. The company has also started to scale its men's and plus-size businesses but has said those divisions still have lower gross margins than women's.

Stitch Fix is calling for sales of $354 million to $360 million in the first quarter and $1.47 billion to $1.53 billion for the full year. Analysts have been calling for sales of $359.2 million for the current quarter and $1.48 billion for fiscal 2019.

Stitch Fix has a market cap of roughly $4.4 billion.