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Stitch Fix and ThredUp shares fall, as both companies navigate ambitious transitions

‘It will take time to accomplish our ambitious plan to significantly evolve,’ Stitch Fix CEO says With clothing demand still muted, online styling service Stitch Fix Inc. on Monday said it was trying to become a more “fun” destination for customers, while online second-hand shop ThredUp Inc. has been trying to make a bigger push into consignment sales.

But both companies said those ambitions would take time to realize, and their forecasts for the months ahead disappointed investors, in one way or another.

In the process, Stitch Fix shares SFIX, +2.18% tumbled 14.7% after hours on Monday, while ThredUp’s stock TDUP, +11.85% slid 8.5%.

For the past two years, higher prices for essentials like groceries and gasoline have dampened spending on less essential things, like clothing, and many retailers have cut prices on apparel in an effort to attract customers. Stitch Fix has dealt with falling sales, and recently ended operations in the U.K. Last year, it laid off employees, and it has shaken up leadership.

The company on Monday reported fiscal second-quarter results that were worse than expected. And it said it expected fiscal third-quarter sales of between $300 million and $310 million, below FactSet forecasts for $322 million.

For the full year, set to wrap up around the end of July, the company said it expected sales of $1.29 billion to $1.32 billion, down from prior expectations of $1.3 billion to $1.37 billion and below analysts’ estimates for $1.35 billion.

Chief Executive Matt Baer, during Stitch Fix’s earnings conference call, said that in the months ahead, the company wants to create a more “fun and visual” experience that would be more interactive. He added that it would take other steps to deepen relationships between customers looking to try out new styles and the Stitch Fix stylists who help them do that.

“Our stylists play a critical part in our value proposition, and our clients have told us they want to get to know the stylists behind their Fixes,” Baer said, referring to the personalized clothing shipments its customers receive from stylists.

But he added: “While some of these initiatives will begin to roll out in the coming months, it will take time to accomplish our ambitious plan to significantly evolve the Stitch Fix client experience.”

ThredUp, meanwhile, said it expected first-quarter sales of $79 million to $81 million, just below Wall Street’s forecasts for $81.2 million. For the full year, the company’s sales outlook was $340 million to $350 million, in line with analysts’ forecasts for $345 million.