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Stitch Fix reported earnings for its fiscal Q3 2019 (ended April 27, 2019), revealing that it brought in $408.9 million in revenue, up 29% year-over-year (YoY). This result gives Stitch Fix three consecutive quarters of accelerating revenue growth and is tied for the company’s highest quarterly growth since its IPO in November 2017. The personal styling service now has 3.1 million active clients, up 17% YoY.
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The company is raising its guidance for revenue growth in its fiscal Q4 2019 to rates that would shatter its other post-IPO performances. It boosted its revenue growth guidance for next quarter from 29-35% YoY to 34-37% YoY. Of note, the minimum of the new range (34%) is 5 percentage points higher than its previous best mark since its IPO.
This would lead to between $425 million and $435 million in revenue. The increase in expectations is due to factors including growth in net revenue per active client and overall client growth, CFO Paul Yee said on the company’s earnings call.
Stitch Fix’s strong performance and high hopes for the future are partially due to its current and growing ability to increase its client base and its revenue from existing users.
- Stitch Fix has been able to simultaneously add users and earn greater spend from its existing base. In addition to growing its user base 17% YoY in the quarter, its net revenue per active client grew 8% YoY, marking the metric’s fourth straight quarter of growth, Yee said. This means Stitch Fix is not only attracting new consumers with its offering and marketing, but also growing its appeal with consumers it’s already won over, giving it greater growth potential going forward.
- Style Pass has posted a renewal rate of over 70% and could help attract new consumers and additional spend from clients. Style Pass allows consumers to pay an annual $49 fee to receive an unlimited number of "fixes," rather than paying a $20 fee for each fix, and has now been around for a little over a year. Its high renewal rate is a good sign for the program, which is valuable to Stitch Fix because it lets consumers shop for apparel on demand, without the friction of a fee for each fix: Style Pass has already boosted retention rates and average revenue per client among its users relative to non-Style Pass users, CEO Katrina Lake said on the call. And if consumers have avoided Stitch Fix because they don’t want to pay a fee for each fix, Style Pass can assuage those concerns and potentially bring them into the fold.
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See Also:
- The FTC is inquiring about Amazon’s practices for a future antitrust investigation
- Amazon is launching a yearlong “Clicks and Mortar” pop-up initiative in the UK
- President Trump’s new tariffs threaten to upend retail
Source: Business Insider – dkeyes@businessinsider.com (Daniel Keyes)