Dive Brief:
- Stitch Fix shares fell on Tuesday morning on weaker than expected growth in active clients, which the company reported Monday evening in its fiscal first quarter release. Active clients (an important metric for a company with a significant subscription service) rose 22% year over year to 2.9 million.
- The company did beat sales and earnings expectations as net revenue rose 24% year over year to $366.2 million. The company also reported net income of $10.7 million and adjusted EBITDA of $14.3 million. The company expects second quarter revenue between $360 million and $368 million and for its active client count to be flat quarter over quarter, according to a transcript of an earnings call from Seeking Alpha.
- Meredith Dunn, most recently Stitch Fix vice president of Styling and Client Experience, also announced on Tuesday that she will leave the company to become the COO of online interior design service Modsy, according to a press release from that company emailed to Retail Dive.
Dive Insight:
The styling service notched a year of being on the public stock exchange with muted excitement. The company, often touted as a major apparel disruptor, may be getting a dose of reality after years of ambitious venture capital-funded growth. However, plans to expand in the U.S. and abroad (in the U.K.) haven't slowed.
Executives touted the fact that in the quarter the company added new brands like Michael Kors, Bonobos, The North Face, Converse and Madewell. It also began expanding sizing in its men's and women's assortment to include plus sizes.
"In Plus, we continue to get great client feedback on the fit of our denim, and have expanded our offerings there too," Mike Smith, president and COO of Stitch Fix, said in a statement. "All of our assortment investments are deeply rooted in direct feedback from clients, so we're confident they're going to love our new additions."
In October, Stitch Fix was hit with a number of lawsuits alleging that the styling service made misleading statements about its growth prospects and advertising plans. Those suits alleged that Stitch Fix violated federal securities laws by making false and/or misleading statements about the strength of its active client growth, its television advertising plans and the impact of those on its profit and growth prospects.
After five years with the company, Dunn is leaving her post to spur operational growth at Modsy. "We believe her experience scaling high performing remote teams at Stitch Fix, her passion for customer success and her adept operational background with wildly successful retail companies will greatly help Modsy continue on its innovative path to creating happy homes," Modsy CEO Shanna Tellerman said in a statement regarding the executive appointment.
