SAN FRANCISCO, June 04, 2024 (GLOBE NEWSWIRE) -- Stitch Fix, Inc. (NASDAQ:SFIX), the trusted online personal styling service, today announced its financial results for the third quarter of fiscal 2024, ended April 27, 2024. "At Stitch Fix, we are on a mission to help people discover the styles they will love that fit perfectly so they always look and feel their best, and this commitment is at the heart of our transformation," said Matt Baer, Chief Executive Officer, Stitch Fix. "Our Q3 revenue and adjusted EBITDA exceeded our expectations, which we believe signals that our transformation efforts are beginning to work. While we are still in early days, I am confident that our strategic focus on strengthening our foundation and reimagining the client experience will put us on the right path to deliver sustainable, profitable growth in the future." During the first quarter of fiscal 2024, we ceased operations of our UK business and met the accounting requirements for reporting the UK business as a discontinued operation. Accordingly, our unaudited condensed consolidated financial statements reflect the results of the UK business as a discontinued operation for all periods presented. Unless otherwise noted, amounts and disclosures below relate to our continuing operations. Third Quarter Fiscal 2024 Key Metrics and Financial Highlights Net revenue of $322.7 million, a decrease of 16% year-over-year. Active clients of 2,633,000, a decrease of 172,000, or 6%, quarter-over-quarter; and a decrease of 655,000, or 20%, year-over-year. Net revenue per active client ("RPAC") of $525, an increase of 2% year-over-year. Gross margin of 45.5%, an increase of 280 basis points year-over-year, which reflects improved product margins and transportation leverage. Net loss from continuing operations of $22.0 million and diluted loss per share from continuing operations of $0.18. Adjusted EBITDA of $6.7 million, which reflects continued cost management discipline. Free cash flow was $18.9 million in the third fiscal quarter. We ended the quarter with $244.5 million of cash, cash equivalents, and investments; and no debt. Financial Outlook Our financial outlook for our continuing operations for the fourth quarter of fiscal 2024 ending August 3, 2024, is as follows:   Q4 2024 Net Revenue $312 million – $322 million (14)% – (12)% YoY (21)% – (19)% YoY adjusted to a 13-week period (1) Adjusted EBITDA $5 million – $10 million 1.6% – 3.1% margin (1) Fourth quarter of fiscal 2024 net revenue from continuing operations has been adjusted to remove the impact of the extra week for year-over-year comparative purposes. Our fiscal year is a 52-week or 53-week period ending on the Saturday closest to July 31. The fiscal year 2023 was a 52-week year and the fiscal year 2024 is a 53-week year, with the extra week occurring in the fourth quarter ending August 3, 2024. Our financial outlook for our continuing operations for fiscal year 2024, which includes the 53rd week, is as follows:   Fiscal Year 2024 Net Revenue $1.33 billion – $1.34 billion (16)% – (16)% YoY (18)% – (17)% YoYadjusted to a 52-week period(1) Adjusted EBITDA $25 million – $30 million 1.9% – 2.2% margin (1) Full fiscal year 2024 net revenue from continuing operations has been adjusted to remove the impact of the 53rd week for year-over-year comparative purposes. Stitch Fix has not reconciled its Adjusted EBITDA from continuing operations outlook to GAAP net income (loss) from continuing operations because it does not provide an outlook for GAAP net income (loss) from continuing operations due to the uncertainty and potential variability of restructuring and other one-time costs related to continuing operations, net other income (expense), provision for income taxes, and stock-based compensation expense, which are reconciling items between Adjusted EBITDA from continuing operations and GAAP net income (loss) from continuing operations. Because Stitch Fix cannot reasonably predict such items, a reconciliation of the non-GAAP financial measure outlook to the corresponding GAAP measure is not available without unreasonable effort. We caution, however, that such items could have a significant impact on the calculation of GAAP net income (loss) from continuing operations. For more information regarding the non-GAAP financial measures discussed in this release, please see "Non-GAAP Financial Measures" below. In the fourth quarter of fiscal 2024, we reviewed our right-of-use lease asset associated with our San Francisco headquarters for impairment due to our intended change in use of the space. Based on the preliminary analysis completed to date, we expect to record a non-cash impairment charge in the range of $15 million to $20 million during the three months ending August 3, 2024 to reduce the carrying value of the operating lease right-of-use asset to its estimated fair market value. Conference Call and Webcast Information Matt Baer, Chief Executive Officer of Stitch Fix, and David Aufderhaar, Chief Financial Officer of Stitch Fix, will host a conference call at 2:00 p.m. Pacific Time today to discuss the Company's financial results and outlook. A live webcast of the call will be accessible on the investor relations section of the Stitch Fix website at https://investors.stitchfix.com. To access the call by phone, please register at the following link: Dial-In Registration: https://register.vevent.com/register/BIe26aa9bd7a9640ad99317def4d55bb0b Upon registration, telephone participants will receive the dial-in number along with a unique PIN number that can be used to access the call. A replay of the webcast will also be available for a limited time at https://investors.stitchfix.com. About Stitch Fix, Inc. Stitch Fix (NASDAQ:SFIX) is the leading online personal styling service that helps people discover the styles they will love that fit perfectly so they always look - and feel - their best. Few things are more personal than getting dressed, but finding clothing that fits and looks great can be a challenge. Stitch Fix solves that problem. By pairing expert stylists with best-in-class AI and recommendation algorithms, the company leverages its assortment of exclusive and national brands to meet each client's individual tastes and needs, making it convenient for clients to express their personal style without having to spend hours in stores or sifting through endless choices online. Stitch Fix, which was founded in 2011, is headquartered in San Francisco. For more information, please visit https://www.stitchfix.com. Forward-Looking Statements This press release, the related conference call, and webcast contain forward-looking statements within the meaning of the federal securities laws. All statements other than statements of historical fact could be deemed forward looking, including but not limited to statements regarding our expectations for future financial performance, including our profitability and long-term targets; guidance on financial results and metrics for the fourth quarter and full fiscal year of 2024; that the execution of our strategy and priorities will enable us to achieve long-term, sustainable, and profitable growth and positive free cash flow; that our foundational efforts will continue to increase wallet share and improve profitability; that our healthy balance sheet combined with our enviable order economics will enable us to invest in the areas of the business that will drive sustainable, profitable growth in the future; our ability to achieve the expected annualized contribution margin impact from our pricing architecture work; that our AI inventory tool will increase the productivity of our inventory while delivering clients the styles they will love; that optimization of our marketing and the re-imagination of our client experience will help us acquire, retain, and reactivate highly engaged clients over time; the timing of our experience updates; that the work we are doing across merchandising, pricing, client analytics, transportation, and operations will provide opportunities to invest in areas that will drive sustainable, profitable growth in the future; our expectations regarding Average Order Value (AOV), Keep Rate and Average Unit Retail (AUR) for the remainder of the fiscal year; our expectations regarding warehouse costs, transportation costs, gross margin, inventory levels, and advertising spend. These statements involve substantial risks and uncertainties, including risks and uncertainties related to the current macroeconomic environment; our ability to generate sufficient net revenue to offset our costs; consumer behavior; our ability to acquire, engage, and retain clients; our ability to provide offerings and services that achieve market acceptance; our data science and technology, stylists, operations, marketing initiatives, and other key strategic areas; risks related to our inventory levels and management; risks related to our supply chain, sourcing of materials and shipping of merchandise; risks related to international operations; our ability to forecast our future operating results; and other risks described in the filings we make with the SEC. Further information on these and other factors that could cause our financial results, performance, and achievements to differ materially from any results, performance, or achievements anticipated, expressed, or implied by these forward-looking statements is included in filings we make with the SEC from time to time, including in the section titled "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended July 29, 2023. These documents are available on the SEC Filings section of the Investor Relations section of our website at: https://investors.stitchfix.com. We undertake no obligation to update any forward-looking statements made in this press release to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law. The achievement or success of the matters covered by such forward-looking statements involves known and unknown risks, uncertainties, and assumptions. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, our results could differ materially from the results expressed or implied by the forward-looking statements we make. You should not rely upon forward-looking statements as predictions of future events. Forward-looking statements represent our management's beliefs and assumptions only as of the date such statements are made. Stitch Fix, Inc.Condensed Consolidated Balance Sheets(Unaudited)(In thousands, except per share amounts)     April 27, 2024   July 29, 2023 Assets         Current assets:         Cash and cash equivalents   $ 196,507     $ 239,437   Short-term investments     47,998       18,161   Inventory, net     114,467       130,548   Prepaid expenses and other current assets     25,446       27,692   Current assets, discontinued operations     864       9,623   Total current assets     385,282       425,461   Property and equipment, net     57,636       79,757   Operating lease right-of-use assets     89,099       104,533   Other long-term assets     4,653       2,681   Long-term assets, discontinued operations     294       2,046   Total assets   $ 536,964     $ 614,478   Liabilities and Stockholders' Equity         Current liabilities:         Accounts payable   $ 99,242     $ 96,730   Operating lease liabilities     26,791       28,210   Accrued liabilities     65,009       69,893   Gift card liability     10,013       10,328   Deferred revenue     10,328       11,366   Other current liabilities     8,328       8,802   Current liabilities, discontinued operations     138       12,782   Total current liabilities     219,849       238,111   Operating lease liabilities, net of current portion     105,115       125,418   Other long-term liabilities     3,111       3,639   Total liabilities     328,075       367,168   Stockholders' equity:         Class A common stock, $0.00002 par value     1       1   Class B common stock, $0.00002 par value     1       1   Additional paid-in capital     670,182       615,236   Accumulated other comprehensive income (loss)     (498 )     527   Accumulated deficit     (430,755 )     (338,413 ) Treasury stock at cost     (30,042 )     (30,042 ) Total stockholders' equity     208,889       247,310   Total liabilities and stockholders' equity   $ 536,964     $ 614,478   Stitch Fix, Inc.Condensed Consolidated Statements of Operations and Comprehensive Loss(Unaudited)(In thousands, except share and per share amounts)     For the Three Months Ended   For the Nine Months Ended     April 27, 2024   April 29, 2023   April 27, 2024   April 29, 2023 Revenue, net   $ 322,731     $ 383,419     $ 1,017,918     $ 1,227,782   Cost of goods sold     175,753       219,744       568,357       713,041   Gross profit     146,978       163,675       449,561       514,741   Gross margin     45.5 %     42.7 %