Why Stitch Fix stock plunged 36% on Wednesday

Mail order clothing deals try before you buy Stitch Fix (SFIX -37.57%) was destroyed today, plunging 36.2% by noon ET after reporting a huge earnings miss.

On the earnings side, analysts were already bearish, forecasting Stitch Fix to lose $0.19 per share on quarterly sales of $318.5 million. But while the company managed to beat sales, reporting $319.6 million, its earnings were simply atrocious — a loss of $0.30 per share.

Stitch Fix Q4 Earnings (er, Losses)

Stitch Fix’s Q4 sales fell 12.4% year-over-year, while losses rose 25% — and that was the good news.

The bad news is that Stitch Fix’s losses from interrupted operations were just $0.01 per share (so better than last year’s loss). Instead, the loss from continuing operations, a more important number, was $0.29 per share, up more than 70% from a year ago. If this trend continues much longer, Stitch Fix will be out of money the left to lose

Despite the dire numbers, Chief Executive Officer (CEO) Matt Baer boasted that Stitch Fix achieved “the upper end of our guidance on both the top and bottom lines,” which sounds like good news (but investors don’t seem to buy it). ).

Is Stitch Fix Stock a Sale?

Management’s guidance for next year didn’t help. Forecasting figures for the first quarter of fiscal 2025, Stitch Fix said sales would range from $303 million to $310 million, down 15% to 17% year-over-year, so even worse than the quarter’s 12% decline IV. For the full fiscal year 2025, management sees sales likely falling 13% to 17%.

And profits? Stitch Fix hasn’t given any hope that it could turn profitable anytime soon, forecasting only “adjusted EBITDA (earnings before interest, taxes, depreciation and amortization)” (a very non-GAAP number). It also explained that it cannot provide guidance on earnings calculated in accordance with generally accepted accounting principles (GAAP) because it “cannot reasonably predict (its) restructuring and other one-time costs, other net income (expenses), provisions for income. stock compensation fees and expenses”.

Investors don’t seem to find this encouraging, and I can’t blame them.