Stitch Fix Inc (SFIX) Reports Decline in Q1 Revenue Amid Strategic Adjustments
Stitch Fix Inc (NASDAQ:SFIX) reports an 18% year-over-year decline in net revenue from continuing operations, reaching $364.8 million.
Adjusted EBITDA from continuing operations stands at $8.6 million, surpassing the company's guidance.
Active clients from continuing operations decreased by 15% year-over-year, with a net loss from continuing operations of $26.2 million.
Stitch Fix Inc (NASDAQ:SFIX) maintains a strong liquidity position with $262.3 million in cash, cash equivalents, and investments, and no bank debt.
On December 5, 2023, Stitch Fix Inc (NASDAQ:SFIX) released its 8-K filing, detailing the financial results for the first quarter of fiscal year 2024, which ended on October 28, 2023. The company, known for its personalized online styling services, has faced a challenging quarter with a significant decrease in net revenue and active clients. Despite these challenges, Stitch Fix Inc (NASDAQ:SFIX) has managed to generate positive free cash flow and exceed its adjusted EBITDA guidance, indicating effective cost management strategies.
Financial Performance Overview
Stitch Fix Inc (NASDAQ:SFIX) reported net revenue from continuing operations at $364.8 million, marking an 18% decrease compared to the same period last year. This decline is attributed to a 15% year-over-year reduction in active clients, which now total 2,989,000. The net revenue per active client (RPAC) also saw a decrease of 6% year-over-year, coming in at $506. Despite these downturns, the company's adjusted EBITDA from continuing operations was a bright spot, reaching $8.6 million and surpassing the high end of their guidance range.
Cost Management and Profitability
Stitch Fix Inc (NASDAQ:SFIX) has demonstrated disciplined cost management, which is reflected in the adjusted EBITDA figures. The net loss from continuing operations was reported at $26.2 million, with a diluted loss per share from continuing operations of $0.22. However, the company has managed to maintain a strong liquidity position, ending the quarter with $262.3 million in cash, cash equivalents, and investments, and no bank debt. Additionally, Stitch Fix Inc (NASDAQ:SFIX) has entered into a credit agreement for a $50.0 million revolving credit facility, further solidifying its financial stability.
Operational Highlights and Future Outlook
During the quarter, Stitch Fix Inc (NASDAQ:SFIX) ceased operations of its UK business, which is now reported as a discontinued operation. The company has also been focusing on reimagining its business and operating model to achieve sustainable and profitable growth. For the second quarter of fiscal 2024, Stitch Fix Inc (NASDAQ:SFIX) expects net revenue from continuing operations to be between $325 million and $335 million, with an adjusted EBITDA from continuing operations of $2 million to $7 million.
Balance Sheet and Cash Flow Statement
The balance sheet of Stitch Fix Inc (NASDAQ:SFIX) shows a total asset value of $624.038 million as of October 28, 2023. The company's inventory, net of reserves, stands at $160.720 million. On the liabilities side, accounts payable amount to $131.444 million. The condensed consolidated statements of cash flow indicate that the company generated $20.559 million in net cash provided by operating activities from continuing operations.
Management Commentary
CEO Matt Baer remains optimistic about the company's direction, stating,
The original vision of Stitch Fix is as powerful, relevant and compelling today as it was when the company was launched, and I am confident that our best days are ahead of us."
He also emphasized the progress made in optimizing the business and the focus on delivering sustainable and profitable growth in the future.
Conclusion
While Stitch Fix Inc (NASDAQ:SFIX) faces headwinds with declining revenues and active clients, the company's ability to exceed adjusted EBITDA expectations and maintain a strong cash position reflects a resilient operational strategy. Investors and stakeholders will be watching closely to see if the company's efforts to reimagine its business model will lead to a turnaround in the coming quarters.
Explore the complete 8-K earnings release (here) from Stitch Fix Inc for further details.
This article first appeared on GuruFocus.
