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Shares of Stitch Fix (NASDAQ:SFIX) are down more than 14% in premarket trading Friday after the company reported a bigger-than-expected loss and announced staff cuts.
SFIX reported a Q3 loss per share of 72c, compared to 18c in the year-ago period and wider than the estimated loss per share of 53c. Net revenue came in at $492.9 million, down 8% YoY and below the consensus projection of $492.7 million. SFIX reported 3.91 million active clients in the period, down 4.7% YoY, while revenue per active client stood at $553, up 15% YoY.
For Q3, Stitch Fix expects net revenue in the range of $485 million to $495 million, missing the analyst consensus of $497.2 million. Adjusted EBITDA loss in the fourth quarter is expected to range between $25 million and $30 million.
The company also announced plans to cut the workforce by around 15% of salaried positions in hopes to return to profitability.
UBS analyst Kunal Madhukar reiterated a Neutral rating and a $10.00 per share price target.
“The results and the guide did not evoke any optimism in either SFIX’s Fix and FreeStyle TAM or in management’s ability to execute. With inventory increasing q/q, SFIX is like any other apparel retailer subject to consumers’ shifting preferences, and much like other retailers, likely will be impacted by a more promotional environment as other retailers try to sell their excess inventory ahead of the next season,” Madhukar told clients in a note.
J.P. Morgan analyst Cory A Carpenter cut the price target to $8.00 per share from $10.00.
“While earnings weren’t great and highlighted continued challenges as the company transitions to a Fix + Freestyle model, we viewed SFIX results to be much better than feared & we were surprised shares traded down another ~16% after hours,” Carpenter commented.
