Dive Brief:
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Stitch Fix on Monday reported net revenue in the second quarter rose 25% year over year to $370.3 million. Net income reached $12 million and adjusted EBITDA was $19.2 million, according to company press materials.
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The apparel styling service also reported that its active client base rose 18% year over year to reach 3 million. The company held a conference call to discuss the earnings at 5 p.m. Eastern Time Monday.
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"Since becoming a public company, we have posted six consecutive quarters of over 20% growth, which demonstrates our ability to drive consistent business performance," CEO and founder Katrina Lake said in a statement.
Dive Insight:
In a letter to shareholders Monday, Stitch Fix highlighted the role of data science across the business. The company says that data plays an indispensable role in shipping date selection, the warehouse location selected for an order, showing stylists available inventory and collecting feedback, for some examples.
"As we reflect on our second quarter, we believe the initiatives highlighted in this letter underscore our focus on driving client satisfaction through our data science investments, increasing brand awareness, and expanding our client reach internationally," according to the letter.
Looking ahead at the year, the company plans to improve the "matchmaking capability" of data science to pair up inventory to customers' preferences. A new inventory optimization algorithm, launched in the second quarter of fiscal 2019, will help achieve that, the company said in the letter. Early results so far show the algorithm boosted customer satisfaction, the number of items purchased per box and the average order value.
The company also said it's on track to launch in the U.K. in the fourth quarter, having hired a local team. As the company scales at the level of a public company, it's also made more intentional investments in marketing. Last month, the company launched its first integrated brand marketing campaign to drive awareness and emotional engagement.
As digitally native brands like Stitch Fix, Away and Casper grow beyond their early popularity on social media, marketing to broaden the customer base becomes increasingly important — and expensive. But building the value proposition on an emotional relationship, good service and personalization is a differentiator that could help Stitch Fix stand out from big-box apparel chains.
Correction: A former version of this article misstated the day Stitch Fix reported earnings. The company reported second quarter fiscal 2019 earnings on Monday.