Stitch Fix Inc (SFIX, Financial) recently held its fourth quarter and full year fiscal 2023 earnings call, where the company's leadership discussed its financial results and future strategies. The call highlighted the company's focus on improving the client experience, strengthening profitability, and making careful investments to drive growth. The company also emphasized its commitment to being data-led, customer-centric, and technology-driven.
Financial Results and Key Initiatives
For the fiscal year 2023, Stitch Fix reported a net revenue of $1.64 billion, a decline of 21% year over year. The company ended the year with approximately 3.3 million active clients, a decrease of 13% year over year. Despite the revenue decline, the company improved its adjusted EBITDA to approximately $17 million, an improvement of more than $35 million versus the prior year. The company also generated nearly $39 million of free cash flow.
For Q4, Stitch Fix reported a net revenue of $376 million, down 22% year over year, but above the high end of their prior guidance due to higher order volume. The company's Q4 gross margin expanded 330 basis points year over year to 43.3%, thanks to the hard work of their merchandising teams to improve the composition of their inventory over the last year.
Future Outlook and Strategies
Looking ahead, Stitch Fix is focused on improving the client experience, retaining and attracting clients, maximizing the effectiveness of their marketing, increasing leverage in their cost structure, and driving positive free cash flow. For the full year, the company expects total U.S. revenue to be between $1.3 billion and $1.37 billion. They also expect total U.S. adjusted EBITDA to be between $5 million and $30 million, primarily reflecting an improved gross margin and ongoing cost savings initiatives.
Stitch Fix is also focused on enhancing the client experience to deliver personalization. The company believes that being data-led, customer-centric, and technology-driven will continue to be key contributors to ensuring that every client engagement, interaction, and solution is personalized. The company plans to further advance this key point of differentiation by constantly looking at things through the lens of their clients and investing in new capabilities to bring stylists and clients closer together.
Stitch Fix's CEO, Matt Baer, expressed his confidence in the company's future and emphasized the importance of the company's commitment to a technology meets humanity model. He stated that while the company has a lot of hard work to do, he is determined to unlock every opportunity for Stitch Fix to realize its full potential and drive long-term profitable growth.
David Aufderhaar, the company's CFO, also highlighted the company's focus on improving both fixed and variable costs in order to increase their contribution margin and fixed leverage potential. He believes that this focus, along with the acquisition and engagement of high lifetime value clients, will help Stitch Fix maintain profitability and provide a solid foundation for their future growth strategy.