Shares fall more than 16% in after-hours trading following earnings report that shows loss of roughly 200,000 customers in the past year
Stitch Fix Inc. on Thursday reported a decrease in sales and users, and confirmed a media report that it is laying off 15% of its salaried employees.
Stitch Fix SFIX, -10.47% shares fell more than 16% in extended trading and were trading at their all-time closing low after decreasing about 10.5% in the regular session to close at $7.78 following a news report about the layoffs. Stitch Fix shares have never traded for lower than $6.71 in a regular trading session, but shares ended after-hours trading Thursday at $6.51.
On the company’s earnings call, Chief Executive Elizabeth Spaulding said Stitch Fix is undergoing both a transformation from providing online subscriptions to building up what she called its “freestyle” business, and a restructuring that includes layoffs of about 330 people, which amounts to a 4% cut of the company’s total workforce.
“We are confident in the strategy we have in place,” she said, later adding that the restructuring is happening now because “we know we’re in a tough macroeconomic time period” and want to prepare for future growth and profitability.
Dan Jedda, the company’s chief financial officer, said on the call that the restructuring is expected to yield annual savings of $40 million to $60 million in fiscal-year 2023, though the labor savings will be immediate. He also mentioned that the company is looking into “rationalization of our real estate footprint,” and talked about other challenges, such as “uncertainties that others in our industry are facing,” including shipping delays, as well as higher product and shipping costs because of inflation.
Stitch Fix said it had 200,000 fewer clients year over year, with a total of 3.9 million in the third quarter. Analysts had expected almost 3.99 million clients for the quarter.
Stitch Fix reported a third-quarter net loss of $78 million, or 72 cents a share, compared with a loss of $18.8 million, or 18 cents a share, in the year-ago period. Revenue decreased to $492.9 million from $535.6 million in the year-ago quarter.
Analysts surveyed by FactSet had forecast an adjusted net loss of 56 cents a share on revenue of $493.3 million.
Stitch Fix expects fourth-quarter revenue of $485 million to $495 million. Analysts were forecasting a net loss of 50 cents a share on revenue of $494.1 million.
Shares of Stitch Fix have fallen almost 59% year to date. Meanwhile, the S&P 500 SPX, -2.38% index is down about 15% so far this year.