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Stitch Fix (SFIX) Gains 37.8% in Past 3 Months: Here's Why

Stitch Fix, Inc. SFIX is leaving no stone unturned to enrich customers’ experience. The company has been adopting several measures to offer the best-tailored service. Its efforts to boost client experience through Fix and direct buy (currently known as Freestyle) offerings are commendable. Management is also focused on expanding the company’s product assortments and driving awareness for personalized shopping.

Such strengths have been aiding this renowned online personal styling retailer’s price performance for a while now. Over the past three months, shares of the company have appreciated 37.8% compared with the industry’s ’s 25.3% growth. A VGM Score of A for this Zacks Rank #3 (Hold) company further speaks volumes.

In addition, analysts seem pretty optimistic about the company. The Zacks Consensus Estimate for sales and earnings per share (EPS) for fiscal 2024 is currently pegged at $1.73 billion and 2 cents, respectively. These estimates show sales growth of 5.4% year over year and an EPS increase against a loss per share of $1.40 recorded in the year-earlier quarter.

Let’s Delve Deeper

Stitch Fix is expanding its assortments to include more affordable products across categories. Management is on track with a significant transformation of its business in several areas, including the expansion of Shop to the existing client base, the launch and scale of Fix Preview and investments in systems and people. It is constantly leveraging product innovation,evolving assortments and using personalized experiences to gain more clients. The expansion of personalized direct purchases for the clients is also impressive.

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Management remains optimistic about Fix Preview, which offers the opportunity to view proposed items for clients’ next Fix before it’s shipped. Management had earlier rolled out Fix Preview for women's and men's clients across the United States and the U.K. markets. SFIX has also been leveraging algorithmically generated recommendations to boost the efficacy of Fix Preview and continues to refine the data-driven approach to better cater to client preferences.

Stitch Fix is evolving its marketing strategy to efficiently engage and reactivate the audiences. It has also been working on faster sign-up processes and more personalized search-based landing pages to facilitate the clients’s start with Stitch Fix. Management looks forward to enhancing client retention at critical moments with fixed preview and fixed checkout.

Markedly, management has launched Stitch Fix Freestyle, which offers quite a distinct shopping experience. The platform allows customers to discover and buy curated items according to their style preferences, fit and size. Customers can buy items directly from Stitch Fix, irrespective of ordering a Fix first. The service offers an effective way to shop for articles from a wider range of accessible categories and departments, brands and seasonal trending shops. This caters to the customer’s style needs across casual, workwear, occasion, active, athleisure, loungewear, sleepwear and more. The Freestyle drive boasts a variety of unique and new features, including Trending for You, Complete Your Looks, Featured Brands and Shop by Department. Management has been enhancing and broadening SFIX’s personalized shopping, offering via Freestyle.

Overall, Stitch Fix is focused on driving profitability by further simplifying its cost structure to build a more efficient operating model; reinforcing the clients’ experience and evolving its marketing strategy and unique business model to better adapt to the changing retail ecosystem.

Key Picks in Retail

We highlighted three top-ranked stocks, namely Tecnoglass TGLS, Chico's FAS CHS and Wingstop WING.

Tecnoglass manufactures and sells architectural glass,windows and aluminum products for the residential and commercial construction industries. TGLS currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Tecnoglass’ current financial-year sales and earnings per share suggests growth of 43.4% and 82.2%, respectively, from the year-ago reported figures. TGLS has a trailing four-quarter earnings surprise of 26.9%, on average.

Chico's FAS, an omnichannel specialty retailer, currently sports a Zacks Rank of 1. CHS has a trailing four-quarter earnings surprise of 87.5%, on average.

The Zacks Consensus Estimate for Chico's FAS’s current financial-year sales and EPS suggests growth of 19.6% and 127.5%, respectively, from the year-ago reported figures.

Wingstop, which franchises and operates restaurants, currently holds a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 5.8%, on average.

The Zacks Consensus Estimate for Wingstop’s current financial-year sales and earnings per share suggests growth of 25.5% and 23%, respectively, from the year-ago reported numbers. WING has an expected EPS growth rate of 5.8% for three-five years.

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Chico's FAS, Inc. (CHS) : Free Stock Analysis Report

Tecnoglass Inc. (TGLS) : Free Stock Analysis Report

Wingstop Inc. (WING) : Free Stock Analysis Report

Stitch Fix, Inc. (SFIX) : Free Stock Analysis Report

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