Stitch Fix (SFIX) AI Stock Analysis

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Stitch Fix

(NASDAQ:SFIX)

52Neutral

Stitch Fix's overall stock score reflects significant challenges in financial performance, particularly in revenue and profitability. Despite some positive signals from the latest earnings call, such as exceeding revenue and EBITDA expectations, the decline in active clients and bearish technical indicators weigh heavily on the stock. The valuation metrics are also concerning, with negative earnings and no dividends, suggesting caution for potential investors.

Positive Factors

Financial Performance

Stitch Fix shares are pushing higher post-market following a better-than-planned fiscal Q2 print and raise of annual guidance.

Operational Improvements

Ongoing improvements in operating metrics such as average order value, client retention, and engagement are promising signs of stabilization.

Revenue and Margin Growth

Guidance for Q3 revenues is projected to be in the $311M-$316M range, which is higher than the current Street estimate of $279M.

Negative Factors

Client Base Decline

Active clients declined by 15.5% year-over-year to 2.371 million.

Market Valuation

Valuation of this stock will likely continue to be range-bound as long as long-term growth remains in question amidst a competitive and fragmented e-commerce retail environment.

Sustainable Growth Concerns

There are larger question marks around the level of sustainable growth that need to be answered before becoming more constructive.

Stitch Fix (SFIX) vs. S&P 500 (SPY)

Market Cap

$422.45M

Dividend YieldN/A

Average Volume (3M)2.47M

Price to Earnings (P/E)―

Beta (1Y)2.01

Revenue Growth-13.14%

EPS Growth44.84%

CountryUS

Employees4,570

SectorConsumer Cyclical

Sector Strength56

IndustryApparel - Retail

Share Statistics

EPS (TTM)-0.57

Shares Outstanding112,535,690

10 Day Avg. Volume1,843,309

30 Day Avg. Volume2,474,957

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.37

Price to Cash Flow (P/CF)-7.30

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$4.63

Price Target Upside41.16% Upside

Rating ConsensusHold

Number of Analyst Covering5

Stitch Fix Business Overview & Revenue Model

Company DescriptionStitch Fix (SFIX) is an online personal styling service that leverages data science and expert stylists to deliver curated fashion and apparel selections directly to customers' doors. Operating primarily in the e-commerce and retail sectors, Stitch Fix provides personalized clothing and accessory recommendations for men, women, and kids, catering to individual style preferences, sizes, and budgets.

How the Company Makes MoneyStitch Fix generates revenue primarily through the sale of clothing and accessories that are sent to clients. The company operates on a subscription-free model, where customers pay a styling fee for each curated 'Fix' delivery, which can be applied as a credit towards any items they choose to purchase. Stitch Fix also earns revenue through direct purchases from its online shop, where clients can buy items without receiving a curated box. The company's earnings are further supported by its proprietary algorithms and data analytics, which enhance customer satisfaction and increase purchase rates by improving the accuracy of personalized recommendations. Additionally, partnerships with various clothing and accessory brands enable Stitch Fix to offer a wide range of products, contributing to its revenue streams.

Stitch Fix Financial Statement Overview

Summary

Stitch Fix faces significant challenges in revenue growth and profitability, as reflected in its financial statements. While the balance sheet shows some stability with moderate leverage, the negative operating results and cash flow inefficiencies raise concerns about long-term financial health. The company needs to address declining revenues and improve profitability to enhance its financial standing.

Income Statement

Neutral

Stitch Fix's income statement reveals a challenging financial position. The gross profit margin for TTM stands at 44.24%, which is decent, but the company is struggling with profitability as indicated by a net profit margin of -5.55% and an EBIT margin of -5.87%. Revenue has decreased over the years, with a notable decline of 23.66% from 2022 to 2023, which poses a risk to financial stability.

Balance Sheet

Neutral

The balance sheet shows moderate stability. The debt-to-equity ratio is 0.53 for TTM, suggesting a balanced leverage position. However, the return on equity is negative at -35.70%, reflecting the company's inability to generate profit from its equity base. The equity ratio is 41.82%, indicating that a significant portion of assets is financed by equity, which is a positive aspect.

Cash Flow

Neutral

Cash flow analysis indicates a mixed situation. The operating cash flow to net income ratio is -0.39, showing inefficiency in converting profits into cash. Free cash flow has decreased by 10.33% from 2024 to TTM, indicating potential liquidity concerns. However, the company maintains positive free cash flow, which is a positive sign.

TTM	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Breakdown
Income Statement		Total Revenue
1.27B	1.34B	1.64B	2.07B	2.10B	1.71B
	Gross Profit
563.25M	592.04M	691.52M	908.47M	947.64M	754.21M
	EBIT
-79.89M	-118.89M	-177.80M	-208.04M	-63.36M	-51.66M
	EBITDA
-50.35M	-76.06M	-107.34M	-172.28M	-33.43M	-29.05M
	Net Income Common Stockholders
-70.61M	-128.84M	-171.97M	-207.12M	-8.88M	-67.12M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
91.49M	246.97M	257.60M	212.98M	231.33M	286.49M
	Total Assets
0.00	486.86M	614.48M	764.53M	819.15M	769.43M
	Total Debt
0.00	117.50M	154.76M	170.35M	147.32M	164.51M
	Net Debt
91.49M	-45.36M	-84.68M	39.41M	17.54M	21.05M
	Total Liabilities
0.00	299.84M	367.17M	441.88M	358.30M	368.39M
	Stockholders Equity
92.17M	187.02M	247.31M	322.65M	460.85M	401.04M
Cash Flow		Free Cash Flow
12.77M	14.24M	38.82M	9.04M	-50.93M	12.67M
	Operating Cash Flow
27.62M	28.21M	57.83M	55.40M	-15.68M	42.88M
	Investing Cash Flow
-128.75M	-78.74M	64.33M	10.23M	39.09M	-70.46M
	Financing Cash Flow
-14.96M	-15.49M	-15.54M	-60.25M	-38.88M	-1.44M

Stitch Fix Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price3.28

Price Trends

50DMA

3.88

Negative

100DMA

4.26

Negative

200DMA

3.95

Negative

Market Momentum

MACD

-0.19

Negative

RSI

49.09

Neutral

STOCH

66.42

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SFIX, the sentiment is Neutral. The current price of 3.28 is above the 20-day moving average (MA) of 3.09, below the 50-day MA of 3.88, and below the 200-day MA of 3.95, indicating a neutral trend. The MACD of -0.19 indicates Negative momentum. The RSI at 49.09 is Neutral, neither overbought nor oversold. The STOCH value of 66.42 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for SFIX.

Stitch Fix Risk Analysis

Stitch Fix disclosed 45 risk factors in its most recent earnings report. Stitch Fix reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Stitch Fix Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TDUP	65 Neutral	$487.73M	―	-79.06%	―	-6.95%	-0.73%
DDL	64 Neutral	$559.27M	13.95	50.24%	―	13.67%	―
Sector *	60 Neutral	$6.78B	11.63	3.24%	4.20%	2.36%	-21.91%
SFIX	52 Neutral	$422.45M	―	-34.37%	―	-13.14%	44.84%
ZUMZ	49 Neutral	$232.46M	―	-0.50%	―	1.57%	98.64%
LE	49 Neutral	$266.82M	43.11	2.59%	―	-7.44%	―
CPS	47 Neutral	$217.07M	―	112.26%	―	-3.02%	61.50%

* Consumer Cyclical Sector Average

Performance Comparison

SFIX

Stitch Fix

3.35

1.19

55.09%

ZUMZ

Zumiez

11.88

-5.07

-29.91%

Lands' End

8.67

-4.34

-33.36%

CPS

Cooper-Standard Holdings

14.18

-1.82

-11.38%

TDUP

thredUP

4.20

2.59

160.87%

DDL

Dingdong

2.54

1.28

101.59%

Stitch Fix Earnings Call Summary

Earnings Call Date: Mar 11, 2025 | % Change Since: -22.46% | Next Earnings Date: Jun 10, 2025

Earnings Call Sentiment Positive

The earnings call reflects a positive trend in financial performance and strategic execution, with revenue and EBITDA exceeding expectations and growth in key segments like men's and Freestyle. Despite the decline in active clients, the company demonstrates significant operational improvements and strategic investments that bolster its outlook.

Highlights

Revenue and EBITDA Exceed Expectations

Stitch Fix reported second-quarter revenue of $312.1 million and adjusted EBITDA of $15.9 million, both exceeding expectations. This led to an increase in annual guidance for fiscal 2025.

Sequential Improvement in Revenue Comps

The company achieved a 710 basis point sequential improvement in year-over-year revenue comps and a contribution margin of 33%, marking the fourth consecutive quarter above 30%.

Men's Business and Freestyle Channel Growth

Both the men's business and the Freestyle channel returned to year-over-year revenue growth, indicating success in strategic investments and reimagined client experiences.

Increased Average Order Value (AOV)

AOV was up 9% year-over-year, driven by higher keep rates, AUR, and items per Fix. This marks the sixth consecutive quarter of year-over-year AOV increase.

Improved Inventory Management

Net inventory was down 13% year-over-year and 8% quarter-over-quarter, aided by AI tools for better inventory management.

Gross Margin and Contribution Margin Improvements

Gross margin for Q2 was 44.5%, up 110 basis points year-over-year. Contribution margin was 33%, sustaining above the historical range of 25%-30%.

Lowlights

Active Client Decline

Active clients ended the quarter at 2.4 million, down 16% year-over-year and 2.6% quarter-over-quarter, presenting a challenge for future growth.

Challenges in Client Growth

Although recent AOV increases present growth opportunities, they also pose challenges for future revenue growth comps, particularly as active client numbers continue to decline.

Company Guidance

During the second quarter of fiscal year 2025, Stitch Fix exceeded its expectations with revenue reaching $312.1 million and adjusted EBITDA standing at $15.9 million. The company reported a 9% year-over-year increase in average order value (AOV), driven by improvements in keep rate, average unit retail (AUR), and items per Fix. Additionally, the contribution margin was 33%, marking the fourth consecutive quarter above 30%. Despite a 16% year-over-year decline in active clients to 2.4 million, revenue per active client (RPAC) grew by 4% to $537. Gross margin improved by 110 basis points to 44.5%, and inventory levels were reduced by 13% year-over-year to $109.6 million. Encouraged by these results, Stitch Fix raised its annual revenue guidance to between $1.225 billion and $1.240 billion and expects adjusted EBITDA for the year to range from $40 million to $47 million.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.