Stitch Fix, Inc. (NASDAQ:SFIX), the trusted online personal styling
service, today announced its financial results for the second
quarter of fiscal 2024, ended January 27, 2024.
“The original Stitch Fix vision, to create an
easier and more enjoyable way for people to shop for clothing and
accessories, remains both relevant and compelling,” said Matt Baer,
Chief Executive Officer. “Our transformation efforts are grounded
in fully realizing that vision and include both strengthening the
foundation of our company and reimagining our client experience. I
am encouraged by the progress we continue to make and am confident
we have the right strategic priorities in place to set us up to
drive sustainable, profitable growth.”
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 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.
Second Quarter
Fiscal 2024 Key Metrics and
Financial Highlights
-
Net revenue from continuing operations of $330.4 million, a
decrease of 18% year-over-year.
-
Active clients from continuing operations of 2,805,000, a decrease
of 184,000, or 6%, quarter-over-quarter; and a decrease of 572,000,
or 17%, year-over-year.
-
Net revenue per active client (“RPAC”) from continuing operations
of $515, a decrease of 3% year-over-year.
-
Gross margin of 43.4%, an increase of 250 basis points
year-over-year, which reflects improved inventory health and
transportation leverage.
-
Net loss from continuing operations of $35.0 million and diluted
loss per share from continuing operations of $0.29.
-
Adjusted EBITDA from continuing operations of $4.4 million, which
reflects continued cost management discipline.
-
Free cash flow from continuing operations was negative $26.1
million in the second fiscal quarter, as expected, due to the
timing of receipts related to our inventory purchases in the first
fiscal quarter.
-
We ended the quarter with $229.8 million of cash, cash equivalents,
and investments attributable to continuing operations; and no bank
debt.
Financial Outlook
Our financial outlook for our continuing
operations for the third quarter of fiscal 2024 ending
April 27, 2024 is as follows:
|
Q3 2024 |
Net Revenue from Continuing Operations |
$300 million - $310 million |
(22)% - (19)% YoY |
Adjusted EBITDA from
Continuing Operations |
$(5) million - $0 million |
(2)% - 0% margin |
|
|
|
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 from Continuing Operations |
$1.29 billion - $1.32 billion |
(19)% - (17)% YoY |
(20)% - (18)% YoY adjusted to a 52-week period (1) |
Adjusted EBITDA from
Continuing Operations |
$10 million - $20 million |
1% - 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.
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/BI1f5c9a29143e4a63b5771ac3029eab2d
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 combines the human touch of expert
stylists with the precision of advanced data science to make online
personal styling accessible to everyone. Stitch Fix helps millions
of clients across the United States find clothing and accessories
they love through a unique model that can extend far beyond the
closet to define the future of shopping. 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 and metrics for
the third 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; our
ability to strengthen the foundation of our business across all
disciplines and embed retail best practices across the enterprise;
that the re-imagining the client experience will help us attract
and engage the right customers, drive higher lifetime value, and
will lead to long-term growth; that our initiatives to strengthen
the foundation of our business will provide the opportunity for us
to realize additional efficiencies in our operations; our ability
to further strengthen our private brand portfolio by making
enhancements to our existing brands and introducing new ones; our
ability to introduce a new onboarding experience that will be a
more dynamic and interactive way for clients to begin their
relationship with us; our ability to deepen engagement by
developing new ways to inspire and empower clients and by enabling
more direct ways to connect with our stylists; our ability to
achieve our plans to significantly evolve the Stitch Fix client
experience; that actions we took in the second quarter, include
negotiating cost savings throughout our business, optimizing our
carrier mix, implementing efficiency measures, and ensuring we have
the right organizational structure in place, will enable our future
success; that there are additional opportunities for us to operate
more efficiently and drive more leverage in both our fixed and
variable cost structures; and our expectations regarding free cash
flow, 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) |
|
|
|
January 27, 2024 |
|
July 29, 2023 |
Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
227,503 |
|
|
$ |
239,437 |
|
Short-term investments |
|
|
2,321 |
|
|
|
18,161 |
|
Inventory, net |
|
|
126,033 |
|
|
|
130,548 |
|
Prepaid expenses and other current assets |
|
|
21,161 |
|
|
|
27,692 |
|
Current assets, discontinued operations |
|
|
953 |
|
|
|
9,623 |
|
Total current assets |
|
|
377,971 |
|
|
|
425,461 |
|
Property and equipment, net |
|
|
63,522 |
|
|
|
79,757 |
|
Operating lease right-of-use assets |
|
|
93,616 |
|
|
|
104,533 |
|
Other long-term assets |
|
|
2,909 |
|
|
|
2,681 |
|
Long-term assets, discontinued operations |
|
|
298 |
|
|
|
2,046 |
|
Total assets |
|
$ |
538,316 |
|
|
$ |
614,478 |
|
Liabilities and
Stockholders’ Equity |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
|
$ |
74,303 |
|
|
$ |
96,730 |
|
Operating lease liabilities |
|
|
27,086 |
|
|
|
28,210 |
|
Accrued liabilities |
|
|
75,694 |
|
|
|
69,893 |
|
Gift card liability |
|
|
11,357 |
|
|
|
10,328 |
|
Deferred revenue |
|
|
9,765 |
|
|
|
11,366 |
|
Other current liabilities |
|
|
9,154 |
|
|
|
8,802 |
|
Current liabilities, discontinued operations |
|
|
2,062 |
|
|
|
12,782 |
|
Total current liabilities |
|
|
209,421 |
|
|
|
238,111 |
|
Operating lease liabilities, net of current portion |
|
|
111,936 |
|
|
|
125,418 |
|
Other long-term liabilities |
|
|
3,688 |
|
|
|
3,639 |
|
Total liabilities |
|
|
325,045 |
|
|
|
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 |
|
|
653,170 |
|
|
|
615,236 |
|
Accumulated other comprehensive income (loss) |
|
|
(432 |
) |
|
|
527 |
|
Accumulated deficit |
|
|
(409,427 |
) |
|
|
(338,413 |
) |
Treasury stock at cost |
|
|
(30,042 |
) |
|
|
(30,042 |
) |
Total stockholders’
equity |
|
|
213,271 |
|
|
|
247,310 |
|
Total liabilities and
stockholders’ equity |
|
$ |
538,316 |
|
|
$ |
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 Six Months Ended |
|
|
January 27, 2024 |
|
January 28, 2023 |
|
January 27, 2024 |
|
January 28, 2023 |
Revenue, net |
|
$ |
330,402 |
|
|
$ |
400,622 |
|
|
$ |
695,187 |
|
|
$ |
844,363 |
|
Cost of goods sold |
|
|
186,922 |
|
|
|
236,866 |
|
|
|
392,604 |
|
|
|
493,297 |
|
Gross profit |
|
|
143,480 |
|
|
|
163,756 |
|
|
|
302,583 |
|
|
|
351,066 |
|
Gross margin |
|
|
43.4 |
% |
|
|
40.9 |
% |
|
|
43.5 |
% |
|
|
41.6 |
% |
Selling, general, and
administrative expenses |
|
|
181,518 |
|
|
|
227,038 |
|
|
|
369,282 |
|
|
|
462,884 |
|
Operating loss |
|
|
(38,038 |
) |
|
|
(63,282 |
) |
|
|
(66,699 |
) |
|
|
(111,818 |
) |
Interest income |
|
|
2,673 |
|
|
|
632 |
|
|
|
4,921 |
|
|
|
1,380 |
|
Other income (expense),
net |
|
|
578 |
|
|
|
(663 |
) |
|
|
989 |
|
|
|
(840 |
) |
Loss before income taxes |
|
|
(34,787 |
) |
|
|
(63,313 |
) |
|
|
(60,789 |
) |
|
|
(111,278 |
) |
Provision for income
taxes |
|
|
169 |
|
|
|
131 |
|
|
|
338 |
|
|
|
318 |
|
Net loss from continuing
operations |
|
|
(34,956 |
) |
|
|
(63,444 |
) |
|
|
(61,127 |
) |
|
|
(111,596 |
) |
Net loss from discontinued
operations, net of income taxes |
|
|
(568 |
) |
|
|
(2,127 |
) |
|
|
(9,887 |
) |
|
|
(9,893 |
) |
Net loss |
|
$ |
(35,524 |
) |
|
$ |
(65,571 |
) |
|
$ |
(71,014 |
) |
|
$ |
(121,489 |
) |
Other comprehensive income
(loss): |
|
|
|
|
|
|
|
|
Change in unrealized loss on available-for-sale securities, net of
tax |
|
|
49 |
|
|
|
941 |
|
|
|
170 |
|
|
|
755 |
|
Foreign currency translation |
|
|
— |
|
|
|
2,501 |
|
|
|
(1,129 |
) |
|
|
889 |
|
Total other comprehensive
income (loss), net of tax |
|
|
49 |
|
|
|
3,442 |
|
|
|
(959 |
) |
|
|
1,644 |
|
Comprehensive loss |
|
$ |
(35,475 |
) |
|
$ |
(62,129 |
) |
|
$ |
(71,973 |
) |
|
$ |
(119,845 |
) |
Loss per share from continuing
operations, attributable to common stockholders: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.29 |
) |
|
$ |
(0.56 |
) |
|
$ |
(0.52 |
) |
|
$ |
(0.99 |
) |
Diluted |
|
$ |
(0.29 |
) |
|
$ |
(0.56 |
) |
|
$ |
(0.52 |
) |
|
$ |
(0.99 |
) |
Loss per share from
discontinued operations, attributable to common stockholders: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.00 |
|
|
$ |
(0.02 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.09 |
) |
Diluted |
|
$ |
0.00 |
|
|
$ |
(0.02 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.09 |
) |
Loss per share attributable to
common stockholders: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.30 |
) |
|
$ |
(0.58 |
) |
|
$ |
(0.60 |
) |
|
$ |
(1.07 |
) |
Diluted |
|
$ |
(0.30 |
) |
|
$ |
(0.58 |
) |
|
$ |
(0.60 |
) |
|
$ |
(1.07 |
) |
Weighted-average shares used
to compute loss per share attributable to common stockholders: |
|
|
|
|
|
|
|
|
Basic |
|
|
119,045,026 |
|
|
|
113,928,081 |
|
|
|
117,845,093 |
|
|
|
113,143,991 |
|
Diluted |
|
|
119,045,026 |
|
|
|
113,928,081 |
|
|
|
117,845,093 |
|
|
|
113,143,991 |
|
|
Stitch Fix, Inc.Condensed Consolidated
Statements of Cash Flow(Unaudited)(In
thousands) |
|
|
|
For the Six Months Ended |
|
|
January 27, 2024 |
|
January 28, 2023 |
Cash Flows from
Operating Activities from Continuing Operations |
|
|
|
|
Net loss from continuing operations |
|
$ |
(61,127 |
) |
|
$ |
(111,596 |
) |
Adjustments to reconcile net
loss from continuing operations to net cash provided by (used in)
operating activities from continuing operations: |
|
|
|
|
Change in inventory reserves |
|
|
(5,137 |
) |
|
|
(6,170 |
) |
Stock-based compensation expense |
|
|
40,967 |
|
|
|
56,391 |
|
Depreciation and amortization |
|
|
26,593 |
|
|
|
21,464 |
|
Asset impairment |
|
|
— |
|
|
|
16,874 |
|
Other |
|
|
(1,353 |
) |
|
|
1,067 |
|
Change in operating assets and liabilities: |
|
|
|
|
Inventory |
|
|
9,652 |
|
|
|
44,912 |
|
Prepaid expenses and other assets |
|
|
6,678 |
|
|
|
7,279 |
|
Income tax receivables |
|
|
— |
|
|
|
26,640 |
|
Operating lease right-of-use assets and liabilities |
|
|
(3,689 |
) |
|
|
39 |
|
Accounts payable |
|
|
(22,463 |
) |
|
|
(36,328 |
) |
Accrued liabilities |
|
|
8,315 |
|
|
|
(3,306 |
) |
Deferred revenue |
|
|
(1,601 |
) |
|
|
(999 |
) |
Gift card liability |
|
|
1,028 |
|
|
|
1,934 |
|
Other liabilities |
|
|
401 |
|
|
|
2,582 |
|
Net cash provided by (used in) operating activities from continuing
operations |
|
|
(1,736 |
) |
|
|
20,783 |
|
Cash Flows from
Investing Activities from Continuing Operations |
|
|
|
|
Proceeds from sale of property
and equipment |
|
|
21 |
|
|
|
— |
|
Purchases of property and
equipment |
|
|
(7,427 |
) |
|
|
(11,398 |
) |
Purchases of securities
available-for-sale |
|
|
— |
|
|
|
(258 |
) |
Sales of securities
available-for-sale |
|
|
— |
|
|
|
4,145 |
|
Maturities of securities
available-for-sale |
|
|
15,970 |
|
|
|
11,210 |
|
Net cash provided by investing activities from continuing
operations |
|
|
8,564 |
|
|
|
3,699 |
|
Cash Flows from
Financing Activities from Continuing Operations |
|
|
|
|
Proceeds from the exercise of
stock options, net |
|
|
— |
|
|
|
154 |
|
Payments for tax withholdings
related to vesting of restricted stock units |
|
|
(8,342 |
) |
|
|
(6,794 |
) |
Other |
|
|
(388 |
) |
|
|
(117 |
) |
Net cash used in financing activities from continuing
operations |
|
|
(8,730 |
) |
|
|
(6,757 |
) |
Net increase (decrease) in
cash and cash equivalents from continuing operations |
|
|
(1,902 |
) |
|
|
17,725 |
|
Cash Flows from
Discontinued Operations |
|
|
|
|
Net cash used in operating activities from discontinued
operations |
|
|
(9,311 |
) |
|
|
(9,723 |
) |
Net cash used in investing activities from discontinued
operations |
|
|
— |
|
|
|
(489 |
) |
Net cash used in financing activities from discontinued
operations |
|
|
(171 |
) |
|
|
(175 |
) |
Net decrease in cash and cash
equivalents from discontinued operations |
|
|
(9,482 |
) |
|
|
(10,387 |
) |
Effect of exchange rate
changes on cash and cash equivalents |
|
|
(550 |
) |
|
|
706 |
|
Net increase (decrease) in
cash and cash equivalents |
|
|
(11,934 |
) |
|
|
8,044 |
|
Cash and cash equivalents at
beginning of period |
|
|
239,437 |
|
|
|
130,935 |
|
Cash and cash equivalents at
end of period |
|
$ |
227,503 |
|
|
$ |
138,979 |
|
Supplemental
Disclosure |
|
|
|
|
Cash paid for income
taxes |
|
$ |
1,233 |
|
|
$ |
178 |
|
Supplemental
Disclosure of Non-Cash Investing and Financing
Activities |
|
|
|
|
Purchases of property and
equipment included in accounts payable and accrued liabilities |
|
$ |
897 |
|
|
$ |
1,430 |
|
Capitalized stock-based
compensation |
|
$ |
2,568 |
|
|
$ |
3,409 |
|
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 from continuing operations (“Adjusted
EBITDA”) is frequently used by investors and securities analysts in
their evaluations of companies, and that this supplemental measure
facilitates comparisons between continuing operations of companies.
We believe free cash flow from continuing operations (“Free Cash
Flow”) is an important metric because it represents a measure of
how much cash from continuing 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 and net other (income)
expense as these items are not components of our core
business;
-
Adjusted EBITDA does not reflect our provision for income taxes,
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;
-
Adjusted EBITDA excludes costs incurred related to discrete
restructuring plans and other one-time costs attributable to our
continuing operations that are fundamentally different in strategic
nature and frequency from ongoing initiatives. We believe exclusion
of these items facilitates a more consistent comparison of
operating performance over time, however these costs do include
cash outflows; 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 loss from
continuing operations excluding interest income, net other (income)
expense, provision for income taxes, depreciation and amortization,
stock-based compensation expense, and restructuring and other
one-time costs related to our continuing operations. The following
table presents a reconciliation of net loss from continuing
operations, the most comparable GAAP financial measure, to Adjusted
EBITDA for each of the periods presented:
|
|
For the Three Months Ended |
|
For the Six Months Ended |
(in thousands) |
|
January 27, 2024 |
|
January 28, 2023 |
|
January 27, 2024 |
|
January 28, 2023 |
Net loss from continuing operations |
|
$ |
(34,956 |
) |
|
$ |
(63,444 |
) |
|
$ |
(61,127 |
) |
|
$ |
(111,596 |
) |
Add (deduct): |
|
|
|
|
|
|
|
|
Interest income |
|
|
(2,673 |
) |
|
|
(632 |
) |
|
|
(4,921 |
) |
|
|
(1,380 |
) |
Other (income) expense, net |
|
|
(578 |
) |
|
|
663 |
|
|
|
(989 |
) |
|
|
840 |
|
Provision for income taxes |
|
|
169 |
|
|
|
131 |
|
|
|
338 |
|
|
|
318 |
|
Depreciation and amortization (1) |
|
|
9,401 |
|
|
|
9,559 |
|
|
|
18,840 |
|
|
|
19,088 |
|
Stock-based compensation expense |
|
|
21,065 |
|
|
|
25,262 |
|
|
|
40,967 |
|
|
|
56,391 |
|
Restructuring and other one-time costs (2) |
|
|
12,019 |
|
|
|
34,742 |
|
|
|
19,969 |
|
|
|
40,897 |
|
Adjusted
EBITDA |
|
$ |
4,447 |
|
|
$ |
6,281 |
|
|
$ |
13,077 |
|
|
$ |
4,558 |
|
(1) For the three and six months ended
January 27, 2024, depreciation and amortization excluded $3.4
million and $7.6 million reflected in “Restructuring and other
one-time costs.” For the three and six months ended
January 28, 2023, depreciation and amortization excluded $1.8
million reflected in “Restructuring and other one-time costs.”(2)
For the three and six months ended January 27, 2024,
restructuring charges were $8.4 million and $16.3 million and other
one-time costs were $3.6 million in one-time professional services
fees. For the three and six months ended January 28, 2023,
restructuring charges were $34.6 million and $35.5 million and
other one-time costs were $0.1 million and $5.4 million in
retention bonuses for continuing employees.
Free Cash Flow
We define Free Cash Flow as net cash flows
provided by (used in) operating activities from continuing
operations, reduced by purchases of property and equipment that are
included in cash flows from investing activities from continuing
operations. The following table presents a reconciliation of net
cash flows provided by (used in) operating activities from
continuing operations, the most comparable GAAP financial measure,
to Free Cash Flow for each of the periods presented:
|
|
For the Three Months Ended |
|
For the Six Months Ended |
(in thousands) |
|
January 27, 2024 |
|
January 28, 2023 |
|
January 27, 2024 |
|
January 28, 2023 |
Free Cash Flow reconciliation: |
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities from continuing
operations |
|
$ |
(22,295 |
) |
|
$ |
22,357 |
|
|
$ |
(1,736 |
) |
|
$ |
20,783 |
|
Deduct: |
|
|
|
|
|
|
|
|
Purchases of property and equipment from continuing operations |
|
|
(3,774 |
) |
|
|
(5,510 |
) |
|
|
(7,427 |
) |
|
|
(11,398 |
) |
Free Cash
Flow |
|
$ |
(26,069 |
) |
|
$ |
16,847 |
|
|
$ |
(9,163 |
) |
|
$ |
9,385 |
|
Net cash provided by (used in)
investing activities from continuing operations |
|
$ |
(624 |
) |
|
$ |
5,700 |
|
|
$ |
8,564 |
|
|
$ |
3,699 |
|
Net cash used in financing
activities from continuing operations |
|
$ |
(4,622 |
) |
|
$ |
(2,976 |
) |
|
$ |
(8,730 |
) |
|
$ |
(6,757 |
) |
Operating Metrics
(in thousands) |
|
January 27, 2024 |
|
October 28, 2023 |
|
July 29, 2023 |
|
April 29, 2023 |
|
January 28, 2023 |
Active clients |
|
2,805 |
|
2,989 |
|
3,121 |
|
3,288 |
|
3,377 |
Active Clients
We define an active client as a client who
checked out a Fix or was shipped an item via 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 Women’s, Men’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. Net revenue per active client was $515 and $530 as of
January 27, 2024, and January 28, 2023, respectively.
Supplemental Unaudited Financial
Information
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. In order to assist investors in understanding the
Company’s historical continuing operations financial results, the
following table provides unaudited continuing operations statement
of operations and reconciliation of net loss from continuing
operations to Adjusted EBITDA for the trailing six fiscal
quarters.
Supplemental Continuing Operations
Statement of Operations
|
|
For the Three Months Ended |
(in thousands) |
|
January 27, 2024 |
|
October 28, 2023 |
|
July 29, 2023 |
|
April 29, 2023 |
|
January 28, 2023 |
|
October 29, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue, net |
|
$ |
330,402 |
|
|
$ |
364,785 |
|
|
$ |
364,739 |
|
|
$ |
383,419 |
|
|
$ |
400,622 |
|
|
$ |
443,741 |
|
Cost
of goods sold |
|
|
186,922 |
|
|
|
205,682 |
|
|
|
203,867 |
|
|
|
219,744 |
|
|
|
236,866 |
|
|
|
256,431 |
|
Gross profit |
|
|
143,480 |
|
|
|
159,103 |
|
|
|
160,872 |
|
|
|
163,675 |
|
|
|
163,756 |
|
|
|
187,310 |
|
Selling, general, and administrative expenses |
|
|
181,518 |
|
|
|
187,764 |
|
|
|
183,815 |
|
|
|
184,195 |
|
|
|
227,038 |
|
|
|
235,846 |
|
Operating loss |
|
|
(38,038 |
) |
|
|
(28,661 |
) |
|
|
(22,943 |
) |
|
|
(20,520 |
) |
|
|
(63,282 |
) |
|
|
(48,536 |
) |
Interest income |
|
|
2,673 |
|
|
|
2,248 |
|
|
|
2,027 |
|
|
|
2,434 |
|
|
|
632 |
|
|
|
748 |
|
Other
income (expense), net |
|
|
578 |
|
|
|
411 |
|
|
|
1,018 |
|
|
|
(203 |
) |
|
|
(663 |
) |
|
|
(177 |
) |
Loss
before income taxes |
|
|
(34,787 |
) |
|
|
(26,002 |
) |
|
|
(19,898 |
) |
|
|
(18,289 |
) |
|
|
(63,313 |
) |
|
|
(47,965 |
) |
Provision for income taxes |
|
|
169 |
|
|
|
169 |
|
|
|
421 |
|
|
|
132 |
|
|
|
131 |
|
|
|
187 |
|
Net
loss from continuing operations |
|
|
(34,956 |
) |
|
|
(26,171 |
) |
|
|
(20,319 |
) |
|
|
(18,421 |
) |
|
|
(63,444 |
) |
|
|
(48,152 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted loss per share from continuing operations, attributable to
common stockholders: |
|
$ |
(0.29 |
) |
|
$ |
(0.22 |
) |
|
$ |
(0.17 |
) |
|
$ |
(0.16 |
) |
|
$ |
(0.56 |
) |
|
$ |
(0.43 |
) |
Diluted weighted-average shares used to compute loss per share
attributable to common stockholders: |
|
|
119,045,026 |
|
|
|
116,645,160 |
|
|
|
117,006,653 |
|
|
|
115,445,285 |
|
|
|
113,928,081 |
|
|
|
112,359,901 |
|
Supplemental Adjusted
EBITDA
|
|
For the Three Months Ended |
(in thousands) |
|
January 27, 2024 |
|
October 28, 2023 |
|
July 29, 2023 |
|
April 29, 2023 |
|
January 28, 2023 |
|
October 29, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from continuing operations |
|
$ |
(34,956 |
) |
|
$ |
(26,171 |
) |
|
$ |
(20,319 |
) |
|
$ |
(18,421 |
) |
|
$ |
(63,444 |
) |
|
$ |
(48,152 |
) |
Add
(deduct): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
(2,673 |
) |
|
|
(2,248 |
) |
|
|
(2,027 |
) |
|
|
(2,434 |
) |
|
|
(632 |
) |
|
|
(748 |
) |
Other income (expense), net |
|
|
(578 |
) |
|
|
(411 |
) |
|
|
(1,018 |
) |
|
|
203 |
|
|
|
663 |
|
|
|
177 |
|
Provision for income taxes |
|
|
169 |
|
|
|
169 |
|
|
|
421 |
|
|
|
132 |
|
|
|
131 |
|
|
|
187 |
|
Depreciation and amortization (1) |
|
|
9,401 |
|
|
|
9,439 |
|
|
|
9,633 |
|
|
|
9,654 |
|
|
|
9,559 |
|
|
|
9,529 |
|
Stock-based compensation |
|
|
21,065 |
|
|
|
19,902 |
|
|
|
23,649 |
|
|
|
22,032 |
|
|
|
25,262 |
|
|
|
31,129 |
|
Restructuring and other one-time costs |
|
|
12,019 |
|
|
|
7,950 |
|
|
|
2,765 |
|
|
|
2,080 |
|
|
|
34,742 |
|
|
|
6,155 |
|
Adjusted EBITDA |
|
$ |
4,447 |
|
|
$ |
8,630 |
|
|
$ |
13,104 |
|
|
$ |
13,246 |
|
|
$ |
6,281 |
|
|
$ |
(1,723 |
) |
(1) Depreciation and amortization excluded amounts reflected in
“Restructuring and other one-time costs.”
|
|
IR
Contact:ir@stitchfix.com |
PR
Contact:media@stitchfix.com |
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