Evan Clark
3 min read
In This Article:
Matt Baer has spent nearly two years under the hood at Stitch Fix Inc. — first rationalizing and then building a new foundation for the AI and human-powered styling service that sends users looks to try on at home.
Now the chief executive officer, who came to Stitch Fix after stints at Walmart Inc. and Macy’s Inc., is getting down to the business of growing.
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Revenues inched up 0.7 percent to $325 million in the fiscal third quarter ended May 3. The number of active clients fell 10.6 percent to 2.4 million from a year earlier, but sales per active client increased 3.2 percent to $542.
Losses tallied $7.5 million with adjusted earnings before interest, taxes, depreciation and amortization of $11 million.
Investors were not blown away and traded shares of the company down 10.5 percent to $4.29 in trading on Wednesday, leaving the firm with a market capitalization of $551.9 million.
Still, the quarter showed signs of forward progress and Baer told WWD in an interview that the turn had been made.
“When I joined Stitch Fix, we were just wrapping up a fiscal year in which we declined in sales by over 22 percent,” Baer said. “And now, six quarters later we posted a return to revenue growth in our third quarter and guided to continued revenue growth in the fourth quarter.
“What underscores that growth is this unrelenting, methodical and judicious approach,” he said. “Anything we did, it was toward an end in which it would enable sustainable and profitable growth over a longer period of time. We didn’t take any shortcuts. We didn’t grow for growth’s sake.”
Stitch Fix’s quarterly average order value grew 10 percent from a year earlier (a string of seven quarterly gains), while keep rates and average unit retail prices rose for the second straight quarter.
Baer said Stitch Fix has been improving its product assortment and has been testing things like larger fixes and fixes that are based off a certain theme or an item the subscriber orders from its Freestyle buying option.
And more is coming.
“We have a really compelling future road map that helps bring real meaningful innovation that will really help the client with their styling, with their outfitting into the future,” the CEO teased. “We’re taking market share from other apparel retailers who struggle to deliver on personalized style. They struggle to deliver on perfect fit. They struggle to deliver on convenience at scale.”
