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Sunday, July 3, 2022

Stitch Fix, Inc. (SFIX) Stock Plummeting in Aftermarket, Here’s the Cause

Stitch Fix, Inc. (SFIX), a company involved in selling a wide range of apparel, shoes, and accessories, has plunged 18.89% in aftermarket trading session. Consequently, the stock was trading at $8.93 when last checked. During Tuesday’s regular trading session, the stock gained an increase of 4.36 percentage points to close the day at $11.01. The slide in aftermarket came as a result of Q2 2022 financial results announcements. The results were perceived to be discouraging by the investors, hence setting on the selling mode.

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Q2 2022 Results

On Tuesday, SFIX announced the results for the second quarter of the fiscal year 2022. The quarter came to an end on the 29th of January 2022. The net revenue generated during the quarter was $516.7 million, depicting an increase of 3% on a year-over-year basis. The company was able to garner 4,019,000 active clients during the quarter, a growth of 4% on a year-over-year basis. The net loss suffered during Q2 022 was estimated to be $30.9 million (or a diluted loss of $0.28 per share). The adjusted EBITDA during the quarter stood at $10.1 million.

Q3 2022 Outlook

SFIX also announced the financial outlook for the third quarter of the fiscal year 2021. The company expects to generate net revenue in the range of $485 million to $500 million during Q3 2022. That would represent a decline of 10% to 7% on a year-over-year basis. The adjusted EBITDA for the third quarter of fiscal 2022 is expected to lie in a range of $(30) million to $(25) million, depicting the margin of (6)% to (5)%.

Comments from CEO of SFIX

Elizabeth Spaulding, CEO of SFIX, commented that the company has continued to experience challenges with client conversion. Despite those, the company remains confident in implementing its long-term strategy and focused on enhancing the overall client experience with a particular focus on growing the number of active clients.

What’s Ahead for SFIX?

Looking towards what’s coming ahead, analysts are of the view that SFIX stock holds several negative signals at the moment. Hence, it is expected to decline in the next few weeks. Investors should keep that in mind while investing in SFIX stock.

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