Online styling service Stitch Fix raked in $7.2 million in net income, or 7 cents per share, over its financial fourth quarter, handily beating Wall Street’s expectations of 4 cents.
The company reported an increase in active clients of 18 percent compared with the same period last year, clocking in at 3.2 million users. Revenue for the quarter landed at more than $432 million, a 36 percent gain over last year, which roughly met expectations.
For its second fiscal year, the tally came to $36.9 million in profit on revenues of $1.58 billion.
In a statement, chief executive officer Katrina Lake called the results “a testament to the strength of our data science capabilities.”
With its second year as a public company in the bag, the business believes it delivered a strong performance. “We further extended our addressable market by launching in the U.K. our first international market and recently celebrated our one-year anniversary of Kids,” Lake said on Tuesday’s earnings call. “We’re excited about the longer-term opportunity for both of these markets which add to the already significant opportunity we have growing our women’s and men’s category.”
Looking ahead, the company expects to pull in revenue of $438 million to $442 million for its fiscal first quarter, landing under Wall Street’s consensus of $451 million.
Generally speaking, the path to growth for a company like Stitch Fix usually relies on adding more subscribers or boosting the amount of purchases per customer. The business, which opened in the U.K. and continues to expand categories, is firing on both cylinders.
The nexus of these decisions tends to come back to Stitch Fix’s data chops. Lake and other executives point to initiatives, such as Shop Your Looks, which suggests items that coordinate with items already purchased, and Style Shuffle, a game that challenges mobile users to thumb-up or thumb-down items.
Lake stressed several times that Shop Your Looks, which has been available as a beta for a limited set of users for just eight weeks, has already offered impressive results. “Approximately 60 percent of clients who buy through the offering purchased two items or more,” she said. Such projects funnel huge amounts of data that inform everything from merchandise buys and marketing to preference algorithms and its foundational personalization platform.
Naturally, the company said hiring more tech talent will be a major priority for 2020.
As for whether it’s concerned about Amazon and its expanding roster of services for fashion hunters, including a personal shopper feature for Wardrobe customers, Lake rejected the notion.
“We have a $400 billion market opportunity here and 80 percent of that market opportunity is still in stores.…Our competition is really the migration of those dollars that are stuck in retail stores and migrating those dollars online,” she said. “And so, I think head-to-head competition-wise, we’re not necessarily looking at look-alike models of who the competitive set is,” she said.