Stitch Fix Inc. continued to gain serious ground in what was a shaky quarter for retail — and president and chief operating officer Mike Smith told WWD its styling service is ready to keep thriving should the consumer cool off.
“The business is really successful and is doing really well in a retail backdrop that I think is very challenging,” said Smith.
The executive took a swipe at the brick-and-mortar competition, noting that what he saw from the most recent round of quarterly retail reports was mostly store closures and “profitless growth.”
In turn, he pointed to Stitch Fix with its approach heavy on artificial intelligence, broad appeal and close, personalized connections with its users and said, “This is the future of retail.”
In its fiscal second quarter ended Jan. 26, Stitch Fix’s net income shot up to $12 million, or 12 cents a diluted share, from $1.7 million, or 2 cents, a year ago. That easily topped the projections of analysts, with earnings per share coming in 7 cents better than the 5 cents projected.
Revenues for the three months increased 25.1 percent to $370.3 million — coming in ahead of the $364.9 million Wall Street projected.
Last quarter, the company’s active client count was a sore spot, when the company reported 2.9 million users, instead of the 2.95 million hoped for and projected that the number would hold steady. Stitch Fix, however, did show growth in its user base, boosting active clients to three million.
Investors liked what they saw and pushed shares of the company up 18.8 percent to $32.06 in after-hours trading Monday.
Stitch Fix is in the midst of a new branding push that goes beyond communicating how its service works, but seeks to frame the brand overall in clients’ minds. A TV spot that made its debut on the Oscars broadcast sought to reach out to customers on a personal level, noting: “At Stitch Fix, we don’t just see your size or your style. We see you, because we think you deserve to be in the spotlight.”
With that, Stitch Fix is trying to play to its strength — specifically its highly personalized approach.
While many retailers are left to wonder or guess who comes in and out of their stores or why shoppers were turned off, Stitch Fix is in constant touch with its users. And when one takes a break from the service, Stitch Fix knows and touches base with them to see why.
“We build trust with clients — whether they have a great experience or a not-great experience, they give us feedback,” Smith said. “We always get this great feedback [either good or bad] that frankly makes us a better retailer. It’s feedback and data that no other retailer has.”
Smith said: “Retailers of the future have to be personalized and relevant and care and build, connect with clients, that’s going to be table stakes for any business. We’re setting that bar today.”
Amazon, of course, looms large over all things online and at South by Southwest, Tony Bacos, Amazon Fashion chief technology officer, made clear just how aggressively the company was going after apparel and chasing consumer data around fashion preferences.
“Being able to have that particular customer’s preference, as well as their body shape, their purchase history — whatever they’re willing to share with us, so that we can give them a more confident fit experience — is a big area of investment for us,” Bacos said.
Smith said Stitch Fix watches Amazon, as nearly everyone has to, but is confident about his company’s positioning.
“They’ve been talking about fashion for 10, 15 years,” Smith said. “They’ve made some progress on it, but I don’t believe they’ve made progress in understanding the customer the way we have.”
And the two companies have different relationships with their customers, Smith said.
“It’s a pretty big pivot for a company like [Amazon] to turn into an emotional-connect brand,” he said.