Stitch Fix (NASDAQ: SFIX) reported its first quarter financial results after market close on Monday. The weaker-than-expected user growth disappointed investors and analysts, which sent shares falling by 28.7% after the opening bell on Tuesday.
For the first quarter, Stitch Fix reported earnings per share of USD 10 cents, higher than USD 4 cents the same quarter last year, and also topped estimates of USD 3 cents per share. Sales in the quarter grew to USD 366 Million, also beating estimates of USD 358 Million.
Stitch Fix also reported an increase in active users on its platform. The Company reported that active users increased by 22% in the quarter to 2.9 million, but the increased did not seem to impress investors.
The weaker-than-expected active user counts concerns investors that the Company may not be retaining its customers. Stitch Fix forecasts that in the next quarter and the current quarter, it expects active customers to remain relatively flat, but revenue per user is expected to increase.
Stitch Fix shares have now fallen 27.91% this year. Although, shares still remain higher than its initial public offering price of USD 15.90. Now, the Company is trying to rebrand itself and gain while retaining its customers.
Stitch Fix offered new brands to its customers in efforts to gain more customers. President and Chief Operating Officer, Mike Smith said in the earnings transcript that the Company added new brands like Michael Kors, Madewell, North Face, Bonobos and Converse to diversify its platform for its customers.
For the second quarter, Stitch Fix expects revenue to fall in between USD 360 Million and USD 368 Million, with the lower end falling below analysts’ estimates of USD 362 Million.