Why These Stitch Fix Analysts Are Disappointed With Fiscal Q2 Print

Shares of Stitch Fix Inc SFIX continued to slide in early trading on Wednesday after the company reported disappointing fourth-quarter earnings.

• Telsey Advisory analyst Dana Telsey maintained a Market Preform rating and price target of $5.
• KeyBanc analyst Noah Zatzkin reiterated a Sector Weight rating on the stock.

Check out other analyst stock ratings.

Telsey Advisory

“Operationally, Q2 sales and gross margin missed expectations, and the EBITDA beat was largely driven by $35MM in restructuring and other one-time costs added back to SG&A,” Telsey wrote in a note. On a margin basis, adjusted EBITDA contracted 110 bps to 0.9%,” higher than the 0.3% decline expected, and total revenue fell 20.2% to $412.1 million, she added.

Stitch Fix lowered its fiscal 2023 revenue guidance at the midpoint, while raising its adjusted EBITDA outlook, the analyst stated. The company also announced the departure of CFO Dan Jedda, who is to be succeeded by current SVP of Finance David Aufderhaar.

KeyBanc Capital Markets

Although Stitch Fix reported slightly lower-than-expected revenues for the quarter, its adjusted EBITDA came in higher than Street estimates, “reflecting ongoing cost-saving initiatives,” Zatzkin said. “Notably, SFIX called out a more promotional environment, which negatively impacted net active clients (-11% y/y), and 3Q23 guidance points to continued softness in top-line trends (-22% to -20% y/y)."

“While we are encouraged by ongoing efforts to reduce costs and, relatedly, a return to positive quarterly adj. EBITDA in 2Q, we remain SW given ongoing macro headwinds, which we think will continue to pressure top line NT,” the analyst added.

SFIX Price Action: Shares of Stitch Fix had declined by 15.09% to $4.22 at the time of publication Wednesday.