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StitchFix shares decline on first earnings report

By Kristopher Fraser

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Business

StitchFix, the online styling service, has published its first earnings report, and while revenues exceeded estimates of 295 million dollars, coming in at 296 million dollars, shares still declined 10 percent on Tuesday. Gross margins were hampered by investment into new categories, falling nearly three percentage points.

While the news on the earnings front wasn't impressive to investors, StitchFix had plenty of other good news to report. It's number of active clients has increased to 2.4 million users, up nearly 30 percent from a year ago.

StitchFix's growth was boosted by the launch of men's and plus categories. For women's, the company has added more premium options and entry-level priced options.

StitchFix expects to post second quarter earnings between 287 million and 294 million dollars. Fiscal 2018 revenue could potentially reach 1.22 billion dollars.

"Seasonality in our business does not follow that of traditional retailers, such as typical concentration of revenue in the holiday quarter," the company added in a statement.

It's still unclear as to what sent StitchFix's shares tumbling. "I didn't see anything wrong with the release," retail analyst Jan Kniffen told CNBC. "This is going to be a volatile stock until we all figure it out and, so far, we haven't figured it out."

Declining shares or not, StitchFix is still a profitable business. It's certain that shares will eventually turn around with continued success of the business.

photo:via Blog.stitchfix.com
StitchFix