Stitch Fix down on Q2 report; positive growth several quarters away, per analysts By Investing.com

Shares of Stitch Fix (NASDAQ:) tumbled over 10% in premarket trading Tuesday after the company’s fiscal Q2 results and guidance missed analyst estimates across the board.

The online personal styling service provider posted a Q2 loss per share of $0.29, wider than the $0.22 loss per share expected by analysts. Revenue came in at $330.4 million, while analysts were looking for $330.8 million.

Gross margin for the quarter was reported at 43.4%, marking a 250 basis point improvement from the previous year, yet it was 10 basis points below expectations.

Looking forward, Stitch Fix anticipates Q3 2024 revenue to range from $300 million to $310 million, short of the $322.3 million estimated by analysts.

For the entire fiscal year, the company is projecting revenues to be between $1.29 billion and $1.32 billion, which is also under the consensus estimates of $1.35 billion.

In the aftermath of the report, Bernstein analysts reduced the target price to $3.5 and maintained a Market Perform rating on the stock.

“After a tough Q2 with a small miss and a bigger H2 cut, SFIX is still several quarters away from positive growth,” they said in a note.

“As Mgmt prioritize quality over quantity, they are churning out low-value customers and adding in fewer higher value ones… a margin tailwind, but ultimately caps growth at around MSD%, which caps valuation at around $3.50.”