Here’s How Stitch Fix (SFIX) is Placed Ahead of Q4 Earnings


Stitch Fix, Inc. (SFIX Quick QuoteSFIX ) is scheduled to report fourth-quarter fiscal 2021 numbers on Sep 21, after market close. The Zacks Consensus Estimate for loss per share in the fiscal fourth quarter is pegged at 14 cents, which has been stable over the past 30 days. The consensus estimate indicates an improvement from a loss per share of 44 cents recorded in the preceding quarter. For quarterly revenues, the consensus mark currently stands at $547.8 million, suggesting an increase of about 24% from the year-ago quarter’s tally.

For fiscal 2021, the Zacks Consensus Estimate for sales and loss per share is currently pinned at $2.08 billion and at 43 cents per share each, suggesting respective growth of 21.5% and 35% from the last fiscal year’s actuals.

A glimpse of this online personal-styling service company’s performance shows that it has delivered an earnings surprise of 12.7% in the trailing four quarters, on average.

Factors at Play

Continued growth in the active client base is a significant driver for Stitch Fix. Strength in Fix demand, re-engagement of old clients and reduced dormancy rates (as the company lapped the pandemic-led weakness of the year-ago period) are aiding its active client base. The fourth-quarter performance is likely to have benefited from a continued expansion of the Fix Preview, which is enhancing clients’ experience and delivering strong results.

Quarterly results might also benefit from a revival in apparel demand as consumers started spending more time outdoors with the easing of pandemic-led restrictions. In fact, the company is steadily boosting assortments to include more affordable products across categories. Investments to boost digital features and the ‘direct buy’ facility have also been encouraging to date. All these factors are most likely to have driven the company’s revenues in the to-be-reported quarter.

On its last earnings call on Jun 7, management had stated that it expects to continue capitalizing on demand strength through Fix offerings and its direct buy facility. It then projected net revenues of $540-$550 million for the fiscal fourth quarter. It forecast an adjusted EBITDA of $15-$20 million with an EBITDA margin of 2.8-3.6% for the same period. For fiscal 2021, management had anticipated net revenues of $2.07-$2.08 billion and an adjusted EBITDA of $25-$30 million. It had also estimated an adjusted EBITDA margin of 1.2-1.4% for the fiscal year.

On the flip side, any deleverage in SG&A expenses might have affected the company’s bottom line in the fiscal fourth quarter. Stitch Fix is also steadily making investments in business operations, technology and infrastructure to boost clients’ experience.

What Does the Zacks Model Say?

Our proven model does not conclusively predict a beat for Stitch Fix this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stitch Fix, Inc. Price and EPS Surprise

Stitch Fix, Inc. Price and EPS Surprise

Stitch Fix, Inc. price-eps-surprise | Stitch Fix, Inc. Quote

Although Stitch Fix currently has a Zacks Rank #3, its Earnings ESP of 0.00% makes surprise prediction difficult.

Stocks With a Favorable Combination

Here are some companies worth considering as our model shows that these have the right combination of elements to beat on earnings in the upcoming releases.

KB Home (KBH Quick QuoteKBH ) currently has an Earnings ESP of +1.12% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Darden Restaurants (DRI Quick QuoteDRI ) currently has an Earnings ESP of +0.82% and is a #3 Ranked player.

General Mills (GIS Quick QuoteGIS ) currently has an Earnings ESP of +0.36% and is Zacks #3 Ranked.

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