Stitch Fix Tumbles 10% on Big Miss, Analyst Sees 'Structural Concerns'

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By Senad Karaahmetovic

Shares of Stitch Fix (NASDAQ:SFIX) are down 10% in pre-open today after the company reported weaker-than-expected results and guided down for FQ1.

Stitch Fix reported an FQ4 loss per share of $0.89, significantly worse than the analyst estimate calling for a loss per share of $0.63. Revenue for the quarter came in at $481.9 million versus the consensus estimate of $488.74 million.

For this quarter, Stitch Fix sees revenues at $460 million (the midpoint of the range), again much lower than the consensus of $522.7 million. Adjusted EBITDA is seen between negative $15 million and negative $10 million, while analysts were calling for negative $5.19 million.

On a full-year basis, Stitch Fix sees net revenue at $1.81 billion (the midpoint), a big miss compared to the $2.1 billion consensus. Adjusted EBITDA is projected at negative $35 million (the midpoint) while the Street was calling for a loss of $17 million.

A Stifel analyst cut the price target to $6 from $7 on Hold-rated SFIX shares.

"The transformation of the Freestyle rollout is being complicated by the challenging macroeconomic backdrop. The result has been slower new client growth and conversion as active clients have declined sequentially for three consecutive quarters. The company will need to return to active client growth to drive stronger profitability, though visibility remains limited," the analyst said in a client note.

A Morgan Stanley analyst also cut the price target as she went to $4 from $5 after witnessing another "meaningful revenue and customer guide," which "suggests the Freestyle bull case is increasingly unlikely and structural concerns remain in play."

"We stay EW on valuation and a wide range of potential outcomes," the analyst wrote in a client note.

Elsewhere, Canaccord Genuity analysts cut SFIX shares to Hold.