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Stitch Fix Announces Fourth Quarter and Full Fiscal Year 2021 Financial Results

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SAN FRANCISCO, Sept. 21, 2021 (GLOBE NEWSWIRE) -- Stitch Fix, Inc. (NASDAQ:SFIX), the leading online personal shopping and styling service, has released its financial results for the fourth quarter and full fiscal year 2021 ended July 31, 2021.

Stitch Fix CEO Elizabeth Spaulding said, “In Q4 we delivered $571 million in net revenue, reflecting 29% year-over-year growth, helping us cross $2 billion in annual net revenue for the first time. These results reflect strong performance across our business, in Women’s, Kids and the UK. Today, we are proud to serve almost 4.2 million clients, and with the launch of Stitch Fix Freestyle in August we are significantly increasing our addressable market and we’re energized by the opportunity ahead. As we look forward, we are focused on continuing to expand and transform our offering, and drive awareness of Stitch Fix as the destination for personalized shopping, styling and inspiration, leveraging our unique combination of data science, and creative human judgement.”

Fourth Quarter Key Metrics and Financial Highlights

  • Net revenue of $571.2 million, an increase of 29% year over year

  • Active clients of 4,165,000, an increase of 643,000 or 18% year over year

  • Net revenue per active client of $505, an increase of 4% year over year

  • Net income of $21.5 million and diluted earnings per share of $0.19

  • Adjusted EBITDA of $55.4 million

Full Year Financial Highlights

  • Net revenue of $2.1 billion, an increase of 22.8% year over year

  • Net loss of $8.9 million and diluted loss per share of $0.08

  • Adjusted EBITDA of $64.9 million

Business Highlights

  • Delivered strong top line revenue growth, driven by momentum in Women’s Fix, outsized growth in Kids and the UK, and continued acceleration in our Freestyle channel

  • Drove positive trends in client engagement and retention, with keep rates reaching all-time highs, client churn rates ending the year at all-time lows, and revenue per active client above $500 for the first time

  • Continued to evolve the client experience across Fix, and direct buy (now Freestyle); released numerous feature enhancements such as expanded branded shops, and rolled out Fix Preview to 100% of our Men’s and Women’s clients. As of August, Freestyle is open to everyone

  • Delivered strong adjusted EBITDA, driven by outperformance in revenue, as well as all time high gross margins, achieved through gains in product margins and efficiency in transportation costs

Financial Outlook

Our financial outlook for the first quarter of fiscal 2022, which ends on October 30, 2021, is as follows:

Q1’22

Net Revenue

$560 million - $575 million

14.0% - 17.0% YoY growth

Adjusted EBITDA

$15 million - $20 million

2.7% - 3.5% margin

Our financial outlook for fiscal year 2022, which ends on July 30, 2022, is as follows:

FY’22

Net Revenue

> 15.0% YoY growth

Adjusted EBITDA

> 2.0% margin

Conference Call and Webcast Information

Elizabeth Spaulding, Chief Executive Officer of Stitch Fix, and Dan Jedda, 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 will be accessible on Stitch Fix’s investor relations website at investors.stitchfix.com. Interested parties can also access the call by dialing 800-458-4121 in the U.S. or 323-794-2093 internationally, and entering conference code 7087675.

A telephonic replay will be available through Tuesday, September 28, 2021, at 888-203-1112 or 719-457-0820, passcode 7087675. An archive of the webcast conference call will be available shortly after the call ends at https://investors.stitchfix.com.

About Stitch Fix, Inc.

Stitch Fix is the world's leading online personalized shopping experience. Our unique business model combines the human touch of expert stylists with the precision of advanced data science. Since our founding in 2011, we’ve served as a trusted style partner to millions of people, helping adults and kids get dressed every day feeling like their best selves. The Stitch Fix team is building a transformative and inclusive ecommerce model, an ecosystem of shopping experiences based on convenience and guided discovery that makes it radically simple and delightful for customers to discover and buy what they love. For more, 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 for the first quarter and full year of 2022; the momentum of our business; the rate of client migration to our offering; the forecasted continued and lasting shift to online shopping and our ability to capture market share; our expectation that the overall demand for apparel will increase as the broader environment normalizes; our expected conversion and retention of new and existing clients; the success of and opportunity related to our Freestyle offering; our ability to enhance and broaden Freestyle through additional brands, assortment, price points, and client-facing features; that our new product features, such as Freestyle and Fix preview will drive deeper client adoption; that Freestyle will expand our ecosystem and fuel client acquisition by unlocking the full addressable apparel market; our ability to expand our client base and increase wallet share; our ability to leverage our engineering and data science capabilities to drive efficiencies in our business and enhance our ability to personalize our service and offerings; our ability to invest significantly in our infrastructure to enable new inventory models; that our Active, Athleisure and Lounge apparel categories will be an engine of growth; our ability to scale our branded shops; that our investments will allow us to maximize our working capital efficiency; our advertising and marketing plans, including opening up new marketing channels, and whether our marketing investments will pay off in future quarters; our ability to broaden our assortment and partner with notable brands; and our ability to create new exclusive brands that appeal to clients. These statements involve substantial risks and uncertainties, including risks and uncertainties related to the ongoing COVID-19 pandemic, our responses to the pandemic, the responses of our clients, competitors, suppliers, governmental authorities, and public health officials; our ability to generate sufficient net revenue to offset our costs; the growth of our market and 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; risks related to our supply chain, sourcing of materials and shipping of merchandise; risks related to international operations; 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 Quarterly Report on Form 10-Q for the fiscal quarter ended May 1, 2021. 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 share and per share amounts)

July 31, 2021

August 1, 2020

Assets

Current assets:

Cash and cash equivalents

$

129,785

$

143,455

Short-term investments

101,546

143,037

Inventory, net

212,294

124,816

Prepaid expenses and other current assets

50,512

32,723

Income tax receivable

27,667

22,279

Total current assets

521,804

466,310

Long-term investments

59,035

95,097

Income tax receivable, net of current portion

27,054

742

Property and equipment, net

86,959

70,369

Operating lease right-of-use assets

118,565

132,615

Other long-term assets

5,732

4,296

Total assets

$

819,149

$

769,429

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

$

73,499

$

85,177

Operating lease liabilities

25,702

24,333

Accrued liabilities

99,028

77,590

Gift card liability

9,903

8,590

Deferred revenue

18,154

13,059

Other current liabilities

2,027

3,406

Total current liabilities

228,313

212,155

Operating lease liabilities, net of current portion

121,623

140,175

Other long-term liabilities

8,364

16,062

Total liabilities

358,300

368,392

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

416,755

348,750

Accumulated other comprehensive income (loss)

3,411

2,728

Retained earnings

40,681

49,557

Total stockholders’ equity

460,849

401,037

Total liabilities and stockholders’ equity

$

819,149

$

769,429


Stitch Fix, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(Unaudited)
(In thousands, except share and per share amounts)

For the Three Months Ended

For the Fiscal Year Ended

July 31, 2021

August 1, 2020

July 31, 2021

August 1, 2020

Revenue, net

$

571,159

$

443,408

$

2,101,258

$

1,711,733

Cost of goods sold

305,707

244,298

1,153,622

957,523

Gross profit

265,452

199,110

947,636

754,210

Selling, general, and administrative expenses

244,710

213,377

1,010,997

805,874

Operating income (loss)

20,742

(14,267

)

(63,361

)

(51,664

)

Interest (income) expense

(363

)

(1,033

)

(2,610

)

(5,535

)

Other (income) expense, net

449

162

366

1,593

Income (loss) before income taxes

20,656

(13,396

)

(61,117

)

(47,722

)

Provision (benefit) for income taxes

(812

)

31,071

(52,241

)

19,395

Net income (loss)

$

21,468

$

(44,467

)

$

(8,876

)

$

(67,117

)

Other comprehensive income (loss):

Change in unrealized gain (loss) on available-for-sale securities, net of tax

(153

)

(247

)

(1,503

)

822

Foreign currency translation

288

1,460

2,186

2,093

Total other comprehensive income (loss), net of tax

135

1,213

683

2,915

Comprehensive income (loss)

$

21,603

$

(43,254

)

$

(8,193

)

$

(64,202

)

Net income (loss) attributable to common stockholders:

Basic

$

21,468

$

(44,467

)

$

(8,876

)

$

(67,117

)

Diluted

$

28,012

$

(44,467

)

$

(8,876

)

$

(67,117

)

Earnings (loss) per share attributable to common stockholders:

Basic

$

0.20

$

(0.44

)

$

(0.08

)

$

(0.66

)

Diluted

$

0.19

$

(0.44

)

$

(0.08

)

$

(0.66

)

Weighted-average shares used to compute earnings (loss) per share attributable to common stockholders:

Basic

107,526,693

103,278,240

105,975,403

102,383,282

Diluted

115,439,429

103,278,240

105,975,403

102,383,282


Stitch Fix, Inc.
Condensed Consolidated Statements of Cash Flow
(Unaudited)
(In thousands)

For the Fiscal Year Ended

July 31, 2021

August 1, 2020

Cash Flows from Operating Activities

Net income (loss)

$

(8,876

)

$

(67,117

)

Adjustments to reconcile net income (loss) to net cash provided (used in) operating activities:

Deferred income taxes and valuation allowance

64

22,880

Inventory reserves

8,875

8,828

Stock-based compensation expense

100,696

67,530

Depreciation, amortization, and accretion

29,929

22,617

Other

(3,632

)

882

Change in operating assets and liabilities:

Inventory

(96,056

)

(15,222

)

Prepaid expenses and other assets

(20,096

)

(140

)

Income tax receivables

(31,700

)

(6,543

)

Operating lease right-of-use assets and liabilities

(1,818

)

394

Accounts payable

(12,385

)

(5,520

)

Accrued liabilities

22,011

8,297

Deferred revenue

5,082

1,054

Gift card liability

1,313

1,357

Other liabilities

(9,082

)

3,580

Net cash provided by (used in) operating activities

(15,675

)

42,877

Cash Flows from Investing Activities

Purchases of property and equipment

(35,256

)

(30,207

)

Purchases of securities available-for-sale

(173,726

)

(248,318

)

Sales of securities available-for-sale

104,501

36,587

Maturities of securities available-for-sale

143,574

171,477

Net cash provided by (used in) investing activities

39,093

(70,461

)

Cash Flows from Financing Activities

Proceeds from the exercise of stock options, net

25,932

12,078

Payments for tax withholding related to vesting of restricted stock units

(64,316

)

(12,819

)

Issuance costs on revolving credit facility

(501

)

(694

)

Net cash provided by (used in) financing activities

(38,885

)

(1,435

)

Net increase (decrease) in cash and cash equivalents

(15,467

)

(29,019

)

Effect of exchange rate changes on cash

1,797

1,542

Cash and cash equivalents at beginning of period

143,455

170,932

Cash and cash equivalents at end of period

$

129,785

$

143,455

Supplemental Disclosure

Cash paid for income taxes

$

461

$

365

Supplemental Disclosure of Non-Cash Investing and Financing Activities:

Purchases of property and equipment included in accounts payable and accrued liabilities

$

3,803

$

4,088

Capitalized stock-based compensation

$

5,693

$

2,450

Leasehold improvements paid by landlord

$

$

7,406


Non-GAAP Financial Measures

We report our financial results in accordance with generally accepted accounting principles in the United States (“GAAP”). However, management believes that certain non-GAAP financial measures provide users of our financial information with additional useful information in evaluating our performance. We believe that adjusted EBITDA is frequently used by investors and securities analysts in their evaluations of companies, and that this supplemental measure facilitates comparisons between companies. We believe free cash flow is an important metric because it represents a measure of how much cash from operations we have available for discretionary and non-discretionary items after the deduction of capital expenditures. These non-GAAP financial measures may be different than similarly titled measures used by other companies.

Our non-GAAP financial measures should not be considered in isolation from, or as substitutes for, financial information prepared in accordance with GAAP. There are several limitations related to the use of our non-GAAP financial measures as compared to the closest comparable GAAP measures. Some of these limitations include:

  • adjusted EBITDA excludes interest (income) expense and other (income) expense, net, as these items are not components of our core business;

  • adjusted EBITDA does not reflect our tax provision (benefit), which may increase or decrease cash available to us;

  • adjusted EBITDA excludes the recurring, non-cash expenses of depreciation and amortization of property and equipment and, although these are non-cash expenses, the assets being depreciated and amortized may have to be replaced in the future;

  • adjusted EBITDA excludes the non-cash expense of stock-based compensation, which has been, and will continue to be for the foreseeable future, an important part of how we attract and retain our employees and a significant recurring expense in our business; and

  • free cash flow does not represent the total residual cash flow available for discretionary purposes and does not reflect our future contractual commitments.

Adjusted EBITDA

We define adjusted EBITDA as net income (loss) excluding interest (income) expense, other (income) expense, net, provision (benefit) for income taxes, depreciation and amortization, and stock-based compensation expense. The following table presents a reconciliation of net income (loss), the most comparable GAAP financial measure, to adjusted EBITDA for each of the periods presented:

For the Three Months Ended

For the Fiscal Year Ended

(in thousands)

July 31, 2021

August 1, 2020

July 31, 2021

August 1, 2020

Net income (loss)

$

21,468

$

(44,467

)

$

(8,876

)

$

(67,117

)

Add (deduct):

Interest (income) expense

(363

)

(1,033

)

(2,610

)

(5,535

)

Other (income) expense, net

449

162

366

1,593

Provision (benefit) for income taxes

(812

)

31,071

(52,241

)

19,395

Depreciation and amortization

7,438

6,004

27,610

22,562

Stock-based compensation expense

27,210

20,055

100,696

67,530

Adjusted EBITDA

$

55,390

$

11,792

$

64,945

$

38,428

Free Cash Flow

We define free cash flow as cash flows provided by (used in) operating activities reduced by purchases of property and equipment that are included in cash flows provided by (used in) investing activities. The following table presents a reconciliation of cash flows provided by (used in) operating activities, the most comparable GAAP financial measure, to free cash flow for each of the periods presented:

For the Fiscal Year Ended

(in thousands)

July 31, 2021

August 1, 2020

Free cash flow reconciliation:

Cash flows provided by (used in) operating activities

$

(15,675

)

$

42,877

Deduct:

Purchases of property and equipment

(35,256

)

(30,207

)

Free cash flow

$

(50,931

)

$

12,670

Cash flows provided by (used in) investing activities

$

39,093

$

(70,461

)

Cash flows provided by (used in) financing activities

$

(38,885

)

$

(1,435

)

Operating Metrics

July 31, 2021

May 1, 2021

January 31, 2021

October 31, 2020

August 1, 2020

Active clients (in thousands)

4,165

4,107

3,873

3,763

3,522

Net revenue per active client(1)

$

505

$

481

$

467

$

467

$

486

________________

(1) Fiscal year 2019 was a 53-week year, with the extra week occurring in the quarter ended August 3, 2019. Therefore, net revenue per active client for the quarter ended May 2, 2020, includes the impact of the extra week of revenue.

Active Clients

We define an active client as a client who checked out a Fix or was shipped an item using our direct-buy functionality, “Freestyle,” in the preceding 52 weeks, measured as of the last day of that period. A client checks out a Fix when she indicates what items she is keeping through our mobile application or on our website. We consider each Men’s, Women’s, or Kids account as a client, even if they share the same household.

Net Revenue per Active Client

We calculate net revenue per active client based on net revenue over the preceding four fiscal quarters divided by the number of active clients, measured as of the last day of the period.

IR Contact:

ir@stitchfix.com

PR Contact:

media@stitchfix.com


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