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Stitch Fix Gets Mixed Reviews as Investors Push Stock Down

Published 09/24/2020, 12:12 AM
Updated 09/24/2020, 12:13 AM
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By Christiana Sciaudone

Investing.com -- Stitch Fix (NASDAQ:SFIX) fell 16% after reporting a bigger loss than forecast, but not everyone's Debbie Downer on it.

The online retailer that sends boxes of clothes selected by stylists (known as Fixes) reported a loss per share of 44 cents compares to the expected loss of 16 cents. Revenue of $443.41 million beat the estimated $414.55 million, and active clients of 3.5 million represented an increase of 9% year-over-year.

Analysts diverged on the results, with some raising their price targets and others cutting.

KeyBanc is one firm that raised its price target, to $32 from $28, with consumers turning to specialty retail and away from department stores. Analyst Edward Yruma also expects the direct buy segment -- where customers pick and choose their own items -- to drive incremental sales, StreetInsider said. Plus, most obviously, the core Fix business remains strong.

Wells Fargo (NYSE:WFC), on the other hand, sees first quarter margins challenged as the company invests in inventory and marketing. Analyst Ike Boruchow reiterated his equal weight rating and $18 price target as the company pulled back on  marketing during the epidemic, leading to a loss of repeat customers, according to StreetInsider.

On the company's earnings call, Mike Smith, chief operating officer and interim chief financial officer, said, "We're playing catch up to support the renewed surge in client demand. As such, in Q1, we expect to deliver mid- to high single-digit revenue growth, which reflects robust recent demand trends, offset by lower subsequent Fix volume I just mentioned. It also reflects some of the benefit from our new client growth moving into Q2." 




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