Point correction‘s first financial results, released under new CEO Matt Baer, tested the CEO, the online site reported fashion The vendor reported losses for its fiscal fourth quarter that overlapped with analyst projections.
Although revenue of $375.8 million beat the consensus estimate of $371.24 million, the company reported a loss of 24 cents per share instead of the expected 21 cents. However, when adjusted for restructuring costs, the loss came to 19 cents per share. That was enough for Wall Street to give stocks a brief boost, before falling 5.5% after the stock market faced lower forecasts for the first quarter.
But according to Baer, there are reasons to be positive. Artificial intelligence fever may be pushing the business world into new territories, but data science is Point correction“Personalization algorithms, artificial intelligence, machine learning and data science are fundamental parts of our model,” he said on an earnings call with analysts on Monday.
“It’s clear that these capabilities are changing the way businesses create and deepen their relationships with their customers – and while they have certainly become buzzwords among retailers investing heavily to catch up, they are part of the DNA of Stitch Fix since its creation. and something we will build on in the future.
David Aufderhaar, CFO, provided more light and context on the numbers. “For (the fourth quarter), our performance was better than expected and reflects the work we have done to improve gross margin and ‘right-size’ our cost structure,” he said, referring to decisions such as its recent switch to wind power. its operations in the United Kingdom. In August, the company informed its employees and plans to close this branch of the business before the end of the year. Stitch Fix also chose to reduce its warehouse lineup from five to three.
“We believe consolidation will result in immediate savings and that having inventory in fewer warehouses will make it easier for stylists to create more relevant assortments for customers and we will realize inventory savings as we let’s evolve,” Aufderhaar said.
According to Baer, he is still excited about the business model. He characterized his first 90 days in the leadership role as a period of observation and learning, and he was impressed by the connection customers have with the service, which combines human style and machine learning. But that doesn’t mean deeper changes aren’t on the horizon. The company is analyzing every aspect of the business and its model, he added, and “we’re taking a hard look at what we do and how we do it, optimizing what we can now while considering longer-term opportunities.
For the company, the macroeconomic pressure on the consumer has had a clear impact and is forcing Stitch Fix to reassess its unit economics through assortment and inventory. It’s a scenario that regularly sends retailers into deep discounting mode, but that’s not where Stitch Fix sees its way.
“You know, we don’t have to worry about possible price pressures in terms of price controls by consumers,” Aufderhaar continued. “And, also, we have the luxury of already having that product with a customer, and while they’re thinking about the assortment, whether they keep it or not… they’re not actively checking the prices of that assortment. Also. This gives us a unique advantage of being more of a full-price retailer.
However, it appears more tumult is ahead before things settle down, as the company projects first-quarter 2024 revenue to be between $355 million and $365 million, compared to the $402 million forecast. It also pegs full-year revenue at $1.3 billion to $1.37 billion, which would be lower than the $1.63 billion expected.
But, at least when it comes to earnings, Aufderhaar struck an optimistic note, explaining that “the guide for (the first quarter) was between $2 million and $7 million, and then the guide for the full year was between $5 and $30 million.” “, he said, “and so you can see that we also expect to be profitable in the second half of the year.”