Stitch Fix Woes Amplify: CFO Departure, Weak Fiscal Q2 Send Shares Down
After losing chief executive officer Elizabeth Spaulding in January, Stitch Fix will see another C-suite executive head to the exits, the company announced on Tuesday. That’s not the only loss, as the company’s earnings report posted a $65.6 million loss for the fiscal second quarter.
The net loss, which break down to 58 cents a share, far exceeds the 28 cents a share, or $30.9 million, from this period last year. Revenue year-over-year tanked as well, going from $516.7 million to $412.1 million. Analysts were braced for a down quarter, but the final tally still came up short of the $412.5 million expected. Active clients also disappointed, with an 11 percent decrease landing 3.57 million, not the 3.6 million anticipated.
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But equally or perhaps even more significant is the revelation that chief financial officer Dan Jedda will follow Spaulding, founder Katrina Lake’s successor, out the door. The CEO’s departure was revealed in January, as the company looked to more employment surgery: After cutting staffing last year, the company aimed to stave off the financial bleed by eliminating 20 percent of salaried positions and shuttering its Salt Lake City warehouse.
Last year, Stitch Fix chalked up its woes to two factors: The company’s Freestyle direct-buy business clearly didn’t take off the way it hoped, but it also blamed heavy discounting by apparel retailers. Stores were looking to rid excess inventory, as consumer spending locked onto rising food and energy costs.
None of that has changed, and even with Lake temporarily stepping back in at the helm, it doesn’t appear that will make a meaningful difference. The company issued weak guidance for the third quarter, with revenue projected between $385 million and $395 million. That means only the very upper end of the range could possibly meet analysts’ expectation of $394 million.
Sales for the full fiscal year, which ends on July 29, doesn’t look any better. Executives peg that it will come in between $1.625 billion to $1.645 billion, which would be shy of the $1.647 billion estimated.
Wall Street made its disappointment known, sending shares down more than 4 percent in after-hours trading.
As for Jedda, he will remain until April 3, giving David Aufderhaar, senior vice president of finance, roughly a one-month transition period.
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