Online styling service provider Stitch Fix (NASDAQ:SFIX) posted a bigger-than-expected loss for the fourth quarter of Fiscal 2022 (ended July 30, 2022), amid a challenging macro backdrop. The company slipped into a loss per share of $0.89 from earnings per share of $0.19 in the prior-year quarter. Analysts were expecting a loss per share of $0.63. Q4 revenue declined 16% year-over-year to $481.9 million, missing analysts’ consensus of $489 million.
Furthermore, Stitch Fix expects its Q1 Fiscal 2023 revenue to be in the range of $455 million to $465 million, implying a decline of 20% to 22%. Analysts were expecting revenue of $525 million.
The weak results and outlook dragged down SFIX stock by 1.7% in Tuesday’s extended trading session following a 5.8% decline in regular trading. The stock is down nearly 75% year-to-date.
Sky-high inflation is impacting consumers’ spending on discretionary items. Active clients on Stitch Fix’s platform declined 9% year-over-year to 3.795 million in Q4.
Is SFIX a Buy or Sell?
Currently, Wall Street analysts are sidelined on Stitch Fix stock. The Street’s Hold consensus rating is based on eight Holds and one Sell. The average SFIX price target of $6.06 implies 28.4% upside potential from current levels.
Conclusion
Stitch Fix’s platform is losing active customers amid a tough business backdrop. The near-term pressures might continue to be a drag on revenue and profitability in the quarters ahead. The company is optimizing its cost base to improve its profitability.
