Stitch Fix Revenues In Q3 To Be Dragged By Active Client Declines, Macroeconomic Woes, Analyst Says

Telsey Advisory Group analyst Dana Telsey reiterated a Market Perform rating on Stitch Fix, Inc. SFIX, with a price target of $5.
The company will report fiscal third-quarter earnings results on Tuesday, June 6, after the market close.
The analyst anticipates a revenue decline for the fifth consecutive quarter driven by active client declines.
The analyst remains particularly cautioned on Stitch Fix's continuing challenges in onboarding new customers since the rollout of the direct-buy Freestyle program.
Stitch Fix is searching for a permanent CEO, and the analyst thinks there could be additional executive leadership turnover following the prior CFO's departure in March.
These apart, Stitch Fix is rife with macroeconomic challenges that continue to pressure consumers, making shoppers more selective with their spending, particularly apparel.
Considering these, the analyst expects quarterly sales to decline 20.9% year over year to $390 million.
The analyst sees 60 bps of gross margin contraction to 42% and 700 bps of operating expense leverage to 51.2% in the quarter to be reported.
That said, possible headwinds to monitor for customer weakness include conversion, acquisition, fixed frequency, and inactivity.
Price Action: SFIX shares are trading lower by 8.6% to $3.53 on the last check Wednesday.

Analyst Calendar