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The company’s Q4 report revealed several key metrics, including a revenue decline of 22% to $375.8 million, slightly above the anticipated 23% fall predicted by Wall Street and surpassing the company’s guidance range of $365 million to $375 million. The number of active clients also decreased by 13% year over year, extending an 11% drop from the previous quarter.
Stitch Fix reported an operating loss of $31.2 million for the quarter, a decrease of 68% from the prior-year period. This was largely due to a more than $97 million reduction in selling, general, and administrative expenses. The net loss stood at $28.7 million or $0.24 per share, compared to a net loss of $96.3 million or $0.89 per share in the same period last year.
The company also generated positive free cash flow (FCF) for the third consecutive quarter at $17.7 million, bringing the annual total to $38.8 million. This positive FCF was driven by cost-cutting initiatives that helped the company end the year with $257.6 million in cash, cash equivalents, and short-term investments and no long-term debt.
In other developments, Stitch Fix announced plans to exit the U.K. market due to struggles in gaining traction and projected a revenue decline of between 20% and 16% for fiscal 2024. For Q1 2024 ending Oct. 28, the company expects revenue ranging from $355 million to $365 million for its U.S. business and $7 million for its U.K. business, which is scheduled to close in the first quarter of fiscal 2024. For the full fiscal year, Stitch Fix anticipates revenue between $1.30 billion to $1.37 billion for its U.S. business and $8 million for its U.K. business.
Despite the recent surge in share price, potential investors are advised to approach Stitch Fix with caution due to concerns about the limited appeal of its business model to the apparel-buying population.
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