Stitch Fix, Inc. reported a loss of $65.6 million in the fiscal second quarter ended January 28 as sales declined 20 percent.

Stitch Fix Interim CEO Katrina Lake said, “This quarter, we continued to execute on our plan to achieve profitability and preserve liquidity, delivering adjusted EBITDA of $3.8 million, which is at the high end of our guidance range. Looking forward, we will continue to invest in the advanced data science and machine learning capabilities combined with personalized styling expertise that have set us apart for more than a decade. This strategic re-focusing on our styling-first model will deliver clarity to the client experience and drive efficiency in our marketing spend. We’re proud to have helped millions of clients find clothes that make them feel their best, and we’re confident that this path will ensure that we’re attracting long-term clients to Stitch Fix and paving the way for a return to growth.”

Second Quarter Metrics and Financial Highlights

  • Net revenue of $412.1 million, a decrease of 20 percent year-over-year; 
  • Active clients of 3,574,000, a decrease of 445,000 or 11 percent year-over-year;
  • Net revenue per active client (RPAC) of $516, a decrease of 6.0 percent year-over-year;
  • Net loss of $65.6 million and diluted loss per share of $0.58; and
  • Adjusted EBITDA of $3.8 million.

Sales of $412.1 million compared with guidance in the range of $410 million and $420 million. Adjusted EBITDA $3.8 million compared with guidance in the range of a negative $5 million to a positive $5 million.

Business Updates

  • Executed restructuring plan and other initiatives to realize $135 million of cost reduction targets for FY23 raising Full Year FY23 Adjusted EBITDA and tightening range to between $0 million and $10 million;
  • Operating cash flow for the quarter was $21.1 million, and free cash flow for the quarter was positive $15.4 million—the company’s first quarter of positive free cash flow since Q1 of FY22;
  • Dan Jedda is stepping down as CFO and will be succeeded by David Aufderhaar, SVP of Finance, Stitch Fix, effective April 3.

Financial Outlook
For the fiscal year ending July 29, 2023, the company expects net revenue to be between $1.625 billion and $1.645 billion and adjusted EBITDA between breakeven and $10 million. Previously, the company expected net revenue to be between $1.6 billion and $1.7 billion and adjusted EBITDA to be between $(10) million and $10 million.

Photo courtesy Stitch Fix