Stitch Fix misses profit but grows client base

Retail Dive has reported that Stitch Fix's second quarter revenue rose 24.4 percent to 295.9 million dollars, up from 237.8 million dollars last year, and beating the FactSet analyst expectation of 291 million dollars. Shares fell yesterday as profit of 3.6 million dollars or 2 cents per share fell short of FactSet's estimate of 6 cents per share. Since the second quarter last year, the company grew their subscription service 30.6 percent to 2.5 million.

Earlier this month, it was reported that Stitch Fix's customers are spending less, however the company is still continuing with new initiatives to attract more customers and get current subscribers spending. Currently, their initiatives like StylePass, which offers unlimited styling services, and Extras for add-ons like socks and underwear have gone untested. For the company, it's a matter of figuring out what their customers want next.

As much of their target audience is millennials, it can be difficult given how temperamental millennial consumers are and their demand for the next new or better thing. The company is banking on Extras to keep customers shopping with them, versus going to other brands or e-commerce websites for their needs like socks and underwear.

"[I]t's really too early to tell," Lake said about Extras, according to a transcript from Motley Fool. "These aren't necessarily huge market opportunity items, but what it does is 1. It covers categories that clients would like the convenience of having in their fixes; 2. It also prevents clients from having to look elsewhere for those item types, which they would have had to do six or 12 months ago."

While the company still has some things to figure out as they grow their business, they are still on a positive trajectory, which is a good sign. Continued investment in new programs might be their next step in business, and if they can compete in the tough market of lingerie, underwear and socks, the trajectory could continue.