Stitch Fix reports Q4 net loss while winding down UK operations
Stitch Fix (SFIX) reported a fourth-quarter net loss of $28 million. Yahoo Finance Live examines the path forward for the online styling service under new CEO Matt Baer's leadership and the decision to shutter the business' U.K. operations.
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Video Transcript
BRAD SMITH: Stitch Fix, they're not doing good this morning. Unfortunately, sad to report. Shares are down by about 5% right now the online personal styling company going through a rough patch, announcing its fourth quarter results this week, reporting an over $28 million net loss. It's now winding down its operations in the UK.
And the CEO is conducting a business wide review. Some of that review was already taking place. You heard that within the early commentary that come from the company once they reported earnings. The CEO, Chief Executive Officer Matt Baer had said that our current results are not indicative of what I believe this company can deliver. And I'm committed to realizing the full potential of Stitch Fix driving long term profitable growth.
SEANA SMITH: Yeah. We'll see. I think this company has a long way to go, right, when we talk about turning around its business. Really getting clients back on board. The fact that we are in this current economic environment right now, people are strapped for cash. They don't have much extra within their budgets. They're forced to make some of these tough decisions.
And something like Stitch Fix unfortunately, is exposed to that. So they're saying in their earnings release here that their clients are still being cautious.
But Matt Baer, you mentioned the new CEO there at the helm. He certainly has a proven track record in retail. He's coming from Macy's. He's only been at the company for a couple of months. So he's already made some executive changes.
He's announced job cuts. He meant he did some of the strategic moves that you were just mentioning, like closing the UK business or exploring options there, focusing on the US styling business. But I think they have a long way to go in order to get investors back on board with a company like this.
This is a stock that has been under a tremendous amount of pressure for some time. Lots of people wondering what exactly that growth potential looks like and what they need to do really to execute on that.
BRAD SMITH: I would never tell myself as the most fashionable person out there. However, well, I mean, look I did go to one New York Fashion Week event, so I guess I get looped in with the people. But at the end of the day, I think the clients are saying it all right now. And the clients are speaking through how much they are churning off of this service right now.
Active clients of 3.297 million, that's a decrease of about 498,000 or 13% year over year. So you've got this type of attrition of clients who are leaving the service. No doubt, it's a question of, all right, what are the fashion decisions? What's being served up? And did the client see enough value of continuing to purchase in and having that monthly purchase, even as they may be considering OK, where can I cut some expenses that I may have on a daily basis?
SEANA SMITH: That's up against some stiff competition. You talk about rent the runway. But then many of these legacy department stores like Bloomingdale's, Nordstrom, they offer their own stylist options, right, so you really have to go out there, market it well, sell your product right now, and really distinguish it from the rest. And it's proving to be a little bit of a tough task for Stitch Fix, at least right now.
