Fourth quarter 2021 soars, as revenue surpasses $ 570 million – WWD
Stitch Fix’s business is booming, as fiscal fourth quarter earnings revealed an increase in revenue, to $ 571.2 million, and an expanding active customer base.
The fashion e-commerce company beat revenue expectations of $ 548 million and earnings of 19 cents per share were well above the 13 cents expected by analysts. Active customers reached nearly 4.2 million, marking an 18% year-over-year growth.
Wall Street rewarded the company by catapulting stocks up more than 17% into after-hours trading.
Elizabeth Spaulding, Chief Executive Officer, attributed this success to “the strength of our premium business through our fixed and direct purchase offering. Overall, in the fourth quarter, we generated $ 571 million in net revenue, up 29% from the fourth quarter of 2020, as well as adjusted EBITDA of $ 55 million.
She believes the past year and a half – essentially, the early phases of the COVID-19 era – “ushered in a new era for retail clothing and footwear, increasing our category to roughly 25% of sales. almost 40% online online with one, and we believe the change in consumer behavior is permanent.
By decoding this, Stitch Fix has benefited tremendously from the boom in online shopping, especially given the emphasis on technology.
“Because of this shift and our proactive focus on innovation, this has been a galvanizing time for Stitch Fix as consumers adapt,” she continued. “We have intentionally and successfully captured a disproportionate share of the disrupted apparel market by leveraging new product innovations, evolving our assortment and using our personalized experience to migrate more customers into our ecosystem. “
Interestingly, one of the company’s latest updates was quite significant on the call: Stitch Fix’s new Freestyle service, which was only revealed in recent weeks – too late for that to happen. its effects are pushing up the numbers.
But the company has planted the seed of what it sees as future growth with the announcement.
In reality, Freestyle isn’t entirely new, but an evolution of its existing direct-buying business, except that it’s now unleashed for everyone, not just subscribers. The service functionally organizes a personalized purchase flow of products based on style preferences from a quiz, purchase history, fit and size. Stitch Fix really sees it as a gateway to attracting more consumers to its fold.
In some ways, this brings the company, whose business was built on a subscription model powered by data intelligence, one step closer to traditional e-commerce. But there’s a twist: Freestyle isn’t research-based, the typical way to search for a product, is keyword-based. This means that there can be an element of risk if people don’t see what they want.
The company is committed to making sure that doesn’t happen, focusing on its data and algorithms to generate more fashion intelligence. He also plans a number of expansions, such as adding more brands, promoting more advertising – including influencer marketing, especially using stylists as influencers, as he has said. tested in UK – to increase awareness and add additional product categories.
“Today, we are a largely US-based company with a strong focus on the ups and downs, accounting for over 75 percent of our sales, but only 30 percent of our relevant clothing categories,” said added Spaulding. “We are currently focusing on affordable and mid-range prices, sold through a wide assortment of exclusive and national brands. We are now expanding our wider range of brands and prices, and investing more in the product categories where we see promising success for Freestyle and Fix Preview, namely shoes, dresses, outerwear, accessories and sleepwear and loungewear.
“These product categories represent $ 90 billion in the US female market alone, and we’ve already started to see higher growth rates in categories, like dresses, for our Freestyle experience, compared to patches,” he said. she added.
Stitch Fix doesn’t just rely on Freestyle or assortment changes, nor does it abandon the subscription service that built the business. The company plans to continue investing in Fix Preview, the service that allows subscribers to check items before they ship, and is also pushing new models, like consignment and drop ship. Of the latter two, Spaulding noted that “we’ve had several beta programs out of the two, and we’re really in build mode. [We] having the infrastructure, the vendor’s tools, the ability to automate the capabilities to be able to bring that to life.
All of these different aspects of the business will inform each other to create a matrix of fashion data, buying behaviors and preferences that the company hopes will keep people obsessed with its fashion proposition.