Stitch Fix shares soared Monday, after the company reported a surprise profit and revenue growth of 10% from a year ago.
Its stock was last up more than 33% in after-hours trading.
For its fiscal first quarter ended Oct. 31, Stitch Fix reported earnings of 9 cents per share on revenue of $490.4 million, topping estimates for a loss of 20 cents per share on revenue of $481.2 million, according to Refinitiv data.
Its base of active clients grew to nearly 3.8 million, up 10.2% from a year ago. Stitch Fix defines active clients as people who have bought an item directly from its website, called a “fix,” in the preceding 52 weeks from the last day of the quarter.
“While the apparel industry is currently contracting, we expect to take share and drive higher new client sign-ups as the relevance of our model of personalized discovery and convenience grows,” the company said in a letter to shareholders.
During the coronavirus pandemic, dozens of retailers have filed for bankruptcy, including J.Crew, Brooks Brothers and Francesca’s, and thousands of stores have closed. Fewer consumers are visiting malls to shop for apparel. Many don’t have a need to get dressed up for work and social gatherings, which have been severely limited by this year’s health crisis. At the same time, more sales are shifting online.
Stitch Fix said, given its recent momentum, it expects revenue to grow between 20% and 25% in fiscal 2021.
During the latest quarter, it said it delivered a record success rate across its business, which measures the percentage a given item is purchased by users of the styling service. That means its algorithm-based recommendation engine, which helps create “fixes” for customers, is getting smarter, and fewer items are being returned.
In tandem with the earnings report, it announced the appointment of Dan Jedda, formerly VP and CFO of digital video at Amazon, as its CFO, effective Wednesday.
As of Monday’s market close, Stitch Fix shares are up nearly 40% year to date, bringing its market cap to $3.7 billion.