SAN FRANCISCO, Sept. 18, 2023 (GLOBE NEWSWIRE) -- Stitch Fix, Inc. (SFIX, Financial), the trusted online personal styling service, today announced its financial results for the fourth quarter and full year of fiscal 2023 ended July 29, 2023.
“Since joining Stitch Fix in late June, I have spent time assessing every aspect of our business, operating model, and organization; getting to know what our clients feel we do well and where we can do better; and identifying opportunities to both optimize in the short term and reimagine for the future,” said Chief Executive Officer, Matt Baer. “Our current business results are not indicative of what I believe this Company can deliver, and I am committed to realizing the full potential of Stitch Fix and driving long-term, profitable growth.”
Fourth Quarter Fiscal 2023 Key Metrics and Financial Highlights
- Net revenue of $375.8 million, a decrease of 22% year-over-year
- Net loss of $28.7 million and diluted loss per share of $0.24
- Adjusted EBITDA of $10.4 million
Full Year Fiscal 2023 Key Metrics and Financial Highlights
- Net revenue of $1.6 billion, a decrease of 21% year-over-year
- Active clients of 3,297,000, a decrease of 498,000 or 13% year-over-year
- Net revenue per active client (RPAC) of $497, a decrease of 9% year-over-year
- Net loss of $172.0 million and diluted loss per share of $1.50
- Adjusted EBITDA of $16.8 million
Key Business Updates
- The fourth quarter of fiscal 2023 results exceeded expectations: Delivered revenue of $375.8 million in the fourth fiscal quarter.
- Continuing to realize the benefits of our disciplined cost management: Adjusted EBITDA of $10.4 million in the fourth fiscal quarter, which exceeded our guidance range.
- Further balance sheet strengthening: We generated positive free cash flow for the third quarter in a row, delivering $17.7 million in the fourth fiscal quarter and $38.8 million for the full fiscal year 2023. We ended the year with $257.6 million of cash, cash equivalents, and investments; and no bank debt.
- In June 2023, we announced we were entering a consultation period to explore exiting the market in the United Kingdom (“UK”). On August 24, 2023, we ended the consultation period and made the decision to exit our business in the UK and wind down our operations. We anticipate our UK business will be reported as a discontinued operation in the first quarter of fiscal 2024.
Financial Outlook
Our financial outlook for the first quarter of fiscal 2024 ending October 28, 2023 is for our business in the United States (“US”):
| Q1’24 | ||
| Net Revenue - US Business | $355 million - $365 million | (20)% - (18)% YoY decline |
| Adjusted EBITDA - US Business | $2 million - $7 million | 1% - 2% margin |
Our financial outlook for the full fiscal year 2024 is for our US business. Additionally, our fiscal year is a 52-week or 53-week period ending on the Saturday closest to July 31. The fiscal year 2023 was a 52-week year and the fiscal year 2024 is a 53-week year, with the extra week occurring in the fourth quarter ending August 3, 2024.
Our financial outlook for our US business contemplates the 53-week period for fiscal year 2024:
| Fiscal Year 2024 | ||
| Net Revenue - US Business | $1.30 billion - $1.37 billion | (18)% - (14)% YoY |
| (20)% - (15)% YoY adjusted to a 52-week period (1) | ||
| Adjusted EBITDA - US Business | $5 million - $30 million | 0% - 2% margin |
(1) Full fiscal year 2024 net revenue for the US business has been adjusted to remove the 53rd week for year-over-year comparative purposes.
We expect to recognize net revenue in the UK of approximately $7 million during the first quarter of fiscal 2024 and $8 million during the full fiscal year 2024, which reflects both sales to clients and the liquidation of inventory.
Stitch Fix has not reconciled its adjusted EBITDA outlook to GAAP net income (loss) because it does not provide an outlook for GAAP net income (loss) due to the uncertainty and potential variability of restructuring and net wind-down costs associated with the UK business, net other income (expense), provision for income taxes, and stock-based compensation expense, which are reconciling items between adjusted EBITDA and GAAP net income (loss). Because Stitch Fix cannot reasonably predict such items, a reconciliation of the non-GAAP financial measure outlook to the corresponding GAAP measure is not available without unreasonable effort. We caution, however, that such items could have a significant impact on the calculation of GAAP net income (loss). For more information regarding the non-GAAP financial measures discussed in this release, please see “Non-GAAP Financial Measures” below.
Conference Call and Webcast Information
Matt Baer, Chief Executive Officer of Stitch Fix, and David Aufderhaar, Chief Financial Officer of Stitch Fix, will host a conference call at 2:00 p.m. Pacific Time today to discuss the Company’s financial results and outlook. A live webcast of the call will be accessible on the investor relations section of the Stitch Fix website at https://investors.stitchfix.com.
To access the call by phone, please register at the following link:
Dial-In Registration: https://register.vevent.com/register/BIefb1254531644c08ab19b70e535a0ed9
Upon registration, telephone participants will receive the dial-in number along with a unique PIN number that can be used to access the call. A replay of the webcast will also be available for a limited time at https://investors.stitchfix.com.
About Stitch Fix, Inc.
Stitch Fix combines the human touch of expert stylists with the precision of advanced data science to make online personal styling accessible to everyone. Stitch Fix helps millions of clients across the United States and United Kingdom find clothing and accessories they love through a unique model that can extend far beyond the closet to define the future of shopping. For more, visit https://www.stitchfix.com.
Forward-Looking Statements
This press release, the related conference call, and webcast contain forward-looking statements within the meaning of the federal securities laws. All statements other than statements of historical fact could be deemed forward looking, including but not limited to statements regarding our expectations for future financial performance, including our profitability and long-term targets; guidance on financial results and metrics for the first quarter and full fiscal year of 2024; our ability to deliver long term, profitable growth and positive free cash flow; that the richness of our data allows us to leverage our assortment to deliver compelling style and drive better margins; that we will build upon personalization algorithms, artificial intelligence, machine learning, and data science are as fundamental elements of our model; that we will introduce more people to Stitch Fix and drive market share gains; that we will further evolve the application of both artificial intelligence and human touch to advance this point of differentiation; that we will create new ways of interacting with client; that we will continue to advance our operational capabilities to be optimized for scale; that we have effectively unlocked leverage potential for our business moving forward; that the warehouse consolidation will have immediate cost savings and that having inventory in fewer warehouses will make it easier for stylists to build more relevant assortments for clients and that we will realize inventory efficiencies as we scale; that the combined, annualized cost savings related to the closure of operations in the United Kingdom and the U.S. warehouse consolidation will be approximately $50 million going forward; that we will continue to identify opportunities to improve fixed and variable costs to increase our contribution margin and fixed leverage potential; that our focus on leverage and profitability, along with the acquisition and engagement of high lifetime value clients, will allow us to maintain profitability and provides a solid foundation for our future growth strategy; and our expectations regarding advertising spend. These statements involve substantial risks and uncertainties, including risks and uncertainties related to the current macroeconomic environment; our ability to generate sufficient net revenue to offset our costs; consumer behavior; our ability to acquire, engage, and retain clients; our ability to provide offerings and services that achieve market acceptance; our data science and technology, stylists, operations, marketing initiatives, and other key strategic areas; risks related to our inventory levels and management; risks related to our supply chain, sourcing of materials and shipping of merchandise; risks related to international operations; our ability to forecast our future operating results; and other risks described in the filings we make with the SEC. Further information on these and other factors that could cause our financial results, performance, and achievements to differ materially from any results, performance, or achievements anticipated, expressed, or implied by these forward-looking statements is included in filings we make with the SEC from time to time, including in the section titled “Risk Factors” in our Quarterly Report on Form 10-Q for the fiscal quarter ended April 29, 2023. These documents are available on the SEC Filings section of the Investor Relations section of our website at: https://investors.stitchfix.com. We undertake no obligation to update any forward-looking statements made in this press release to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law. The achievement or success of the matters covered by such forward-looking statements involves known and unknown risks, uncertainties, and assumptions. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, our results could differ materially from the results expressed or implied by the forward-looking statements we make. You should not rely upon forward-looking statements as predictions of future events. Forward-looking statements represent our management’s beliefs and assumptions only as of the date such statements are made.
Stitch Fix, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except share and per share amounts)
| July 29, 2023 | July 30, 2022 | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 239,437 | $ | 130,935 | |||
| Short-term investments | 18,161 | 82,049 | |||||
| Inventory, net | 137,176 | 197,251 | |||||
| Prepaid expenses and other current assets | 30,014 | 39,456 | |||||
| Income tax receivable | 673 | 27,561 | |||||
| Total current assets | 425,461 | 477,252 | |||||
| Long-term investments | — | 17,713 | |||||
| Income tax receivable, net of current portion | — | 26,091 | |||||
| Property and equipment, net | 79,757 | 103,375 | |||||
| Operating lease right-of-use assets | 106,098 | 132,179 | |||||
| Other long-term assets | 3,162 | 7,925 | |||||
| Total assets | $ | 614,478 | $ | 764,535 | |||
| Liabilities and Stockholders’ Equity | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 99,317 | $ | 143,934 | |||
| Operating lease liabilities | 29,343 | 29,014 | |||||
| Accrued liabilities | 78,795 | 94,416 | |||||
| Gift card liability | 10,355 | 10,551 | |||||
| Deferred revenue | 11,551 | 14,441 | |||||
| Other current liabilities | 8,750 | 3,214 | |||||
| Total current liabilities | 238,111 | 295,570 | |||||
| Operating lease liabilities, net of current portion | 125,418 | 141,334 | |||||
| Other long-term liabilities | 3,639 | 4,980 | |||||
| Total liabilities | 367,168 | 441,884 | |||||
| Stockholders’ equity: | |||||||
| Class A common stock, $0.00002 par value | 1 | 1 | |||||
| Class B common stock, $0.00002 par value | 1 | 1 | |||||
| Additional paid-in capital | 615,236 | 522,658 | |||||
| Accumulated other comprehensive income (loss) | 527 | (3,527 | ) | ||||
| Accumulated deficit | (338,413 | ) | (166,440 | ) | |||
| Treasury stock at cost | (30,042 | ) | (30,042 | ) | |||
| Total stockholders’ equity | 247,310 | 322,651 | |||||
| Total liabilities and stockholders’ equity | $ | 614,478 | $ | 764,535 | |||
Stitch Fix, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
(In thousands, except share and per share amounts)
| For the Three Months Ended | For the Twelve Months Ended | ||||||||||||||
| July 29, 2023 | July 30, 2022 | July 29, 2023 | July 30, 2022 | ||||||||||||
| Revenue, net | $ | 375,798 | $ | 481,903 | $ | 1,638,423 | $ | 2,072,812 | |||||||
| Cost of goods sold | 213,058 | 289,240 | 946,902 | 1,164,338 | |||||||||||
| Gross profit | 162,740 | 192,663 | 691,521 | 908,474 | |||||||||||
| Selling, general, and administrative expenses | 193,950 | 291,280 | 869,318 | 1,116,519 | |||||||||||
| Operating loss | (31,210 | ) | (98,617 | ) | (177,797 | ) | (208,045 | ) | |||||||
| Interest income | 2,132 | 231 | 6,220 | 930 | |||||||||||
| Other income (expense), net | 1,041 | (1,259 | ) | 1,094 | (2,355 | ) | |||||||||
| Loss before income taxes | (28,037 | ) | (99,645 | ) | (170,483 | ) | (209,470 | ) | |||||||
| Provision (benefit) for income taxes | 622 | (3,303 | ) | 1,490 | (2,349 | ) | |||||||||
| Net loss | $ | (28,659 | ) | $ | (96,342 | ) | $ | (171,973 | ) | $ | (207,121 | ) | |||
| Other comprehensive income (loss): | |||||||||||||||
| Change in unrealized gain (loss) on available-for-sale securities, net of tax | 251 | 202 | 1,738 | (2,050 | ) | ||||||||||
| Foreign currency translation | 908 | (1,053 | ) | 2,316 | (4,888 | ) | |||||||||
| Total other comprehensive income (loss), net of tax | 1,159 | (851 | ) | 4,054 | (6,938 | ) | |||||||||
| Comprehensive loss | $ | (27,500 | ) | $ | (97,193 | ) | $ | (167,919 | ) | $ | (214,059 | ) | |||
| Net loss attributable to common stockholders: | |||||||||||||||
| Basic | $ | (28,659 | ) | $ | (96,342 | ) | $ | (171,973 | ) | $ | (207,121 | ) | |||
| Diluted | |||||||||||||||
