EX-99.1 2 exhibit991-q220.htm EX-99.1 Document
Exhibit 99.1

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Stitch Fix Announces Second Quarter Fiscal Year 2020 Financial Results

SAN FRANCISCO, March 9, 2020 (GLOBE NEWSWIRE) -- Stitch Fix, Inc. (NASDAQ:SFIX), the leading online personal styling service, has released its financial results for the second quarter of fiscal year 2020 ended February 1, 2020, and posted a letter to its shareholders on its investor relations website.

Second quarter highlights
•Active clients of 3.5 million, an increase of 17% year over year
•Net revenue per active client of $501, an increase of 8% year over year
•Net revenue of $451.8 million, an increase of 22% year over year
•Net income of $11.4 million
•Adjusted EBITDA of $14.3 million and adjusted EBITDA excluding stock-based compensation expense of $30.1 million
•Diluted earnings per share of $0.11
“We are pleased to deliver another strong quarter in Q2,” said Stitch Fix founder and CEO Katrina Lake. “Net revenue was $452 million, representing 22% year-over-year growth, in line with our guidance. We grew active clients to 3.5 million, an increase of 17% year over year, and grew net revenue per active client by 8% year over year, our seventh consecutive quarter of growth and a reflection of our unique personalization capabilities.”
Lake added, “This quarter, we are excited to expand our new direct buy offerings to even more clients. As we continue to evolve our personalization capabilities we're confident in our ability to capture additional market share, and deliver on our mission to transform the way people find what they love.”
Please visit the Stitch Fix investor relations website at https://investors.stitchfix.com to view the financial results included in the letter to shareholders. The Company intends to continue to make future announcements of material financial and other information through its investor relations website. The Company will also, from time to time, disclose this information through press releases, filings with the Securities and Exchange Commission, conference calls, or webcasts, as required by applicable law.
Conference Call and Webcast Information
Katrina Lake, Founder and Chief Executive Officer of Stitch Fix, and Mike Smith, President, Chief Operating Officer, and interim 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 will be accessible on Stitch Fix’s investor relations website at investors.stitchfix.com. Interested parties can also access the call by dialing (888) 394-8218 in the U.S. or (786) 789-4776 internationally, and entering conference code 8951047.
A telephonic replay will be available through Monday, March 16, 2020, at (888) 203-1112 or (719) 457-0820, passcode 8951047. An archive of the webcast conference call will be available shortly after the call ends at https://investors.stitchfix.com.
About Stitch Fix, Inc.
Stitch Fix is an online personal styling service that is reinventing the shopping experience by delivering one-to-one personalization to our clients through the combination of data science and human judgment. Stitch Fix was founded in 2011 by CEO Katrina Lake. Since then, we’ve helped millions of women, men, and kids discover and buy what they love through personalized selections of apparel, shoes, and accessories, curated by Stitch Fix stylists and algorithms. For more information about Stitch Fix, please visit https://www.stitchfix.com.




Forward-Looking Statements
This press release and 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 future financial performance, including our guidance on financial results for the third quarter and full year of fiscal 2020; market trends, growth, and opportunity; profitability; competition; the timing and success of expansions to our offering and penetration of our target markets, such as the launch of our offering in the United Kingdom and the expansion of Shop New Colors and Shop Your Looks; the success of our direct-buy functionality; our ability to leverage our engineering and data science capabilities to drive efficiencies in our business and enhance our ability to personalize; our plans to continue to roll out new features to extend our personalization platform and drive an even stronger personalized eCommerce model; our plans related to client acquisition, engagement, and retention, including any impact on our costs and margins and our ability to determine optimal marketing and advertising methods; and the search for a new CFO. These statements involve substantial risks and uncertainties, including risks and uncertainties related to our ability to generate sufficient net revenue to offset our costs; the growth of our market and 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 international operations; and other risks described in the filings we make with the Securities and Exchange Commission (“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 Quarterly Report on Form 10-Q for the fiscal quarter ended November 2, 2019. 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 share and per share amounts)
  February 1, 2020 August 3, 2019
Assets    
Current assets:    
Cash and cash equivalents $165,989  $170,932  
Short-term investments134,592  143,276  
Inventory, net 147,236  118,216  
Prepaid expenses and other current assets 38,513  49,980  
Total current assets 486,330   482,404  
Long-term investments96,657  53,372  
Property and equipment, net 63,158  54,888  
Operating lease right-of-use assets123,490  —  
Deferred tax assets 27,047  22,175  
Other long-term assets 3,046  3,227  
Total assets $799,728   $616,066  
Liabilities and Stockholders’ Equity    
Current liabilities:    
Accounts payable $86,092  $90,883  
Operating lease liabilities23,475  —  
Accrued liabilities 84,904  69,734  
Gift card liability 10,393  7,233  
Deferred revenue 11,273  11,997  
Other current liabilities 3,934  2,784  
Total current liabilities 220,071   182,631  
Operating lease liabilities, net of current portion125,925  —  
Deferred rent, net of current portion —  24,439  
Other long-term liabilities 14,822  12,996  
Total liabilities 360,818   220,066  
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 308,687  279,511  
Accumulated other comprehensive income (loss)2,294  (187) 
Retained earnings 127,927  116,674  
Total stockholders’ equity 438,910   396,000  
Total liabilities and stockholders’ equity $799,728   $616,066  




Stitch Fix, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
(In thousands, except share and per share amounts)
 For the Three Months EndedFor the Six Months Ended
 February 1, 2020January 26, 2019February 1, 2020January 26, 2019
Revenue, net$451,784  $370,280  $896,599  $736,516  
Cost of goods sold249,597  207,131  493,110  408,199  
Gross profit202,187  163,149  403,489  328,317  
Selling, general, and administrative expenses193,689  147,738  394,831  302,009  
Operating income 8,498  15,411  8,658  26,308  
Interest (income) expense(1,477) (1,170) (3,130) (2,569) 
Other (income) expense, net28  (453) 862  (573) 
Income before income taxes9,947  17,034  10,926  29,450  
Provision (benefit) for income taxes(1,484) 5,058  (327) 6,796  
Net income (loss)$11,431  $11,976  $11,253  $22,654  
Other comprehensive income (loss):
Change in unrealized gain (loss) on available-for-sale securities, net of tax247  104  75  22  
Foreign currency translation651  93  2,406  119  
Total other comprehensive income (loss), net of tax898  197  2,481  141  
Comprehensive income$12,329  $12,173  $13,734  $22,795  
Net income (loss) attributable to common stockholders:
Basic$11,431  $11,968  $11,253  $22,632  
Diluted$11,431  $11,968  $11,253  $22,633  
Earnings (loss) per share attributable to common stockholders:      
Basic$0.11  $0.12  $0.11  $0.23  
Diluted$0.11  $0.12  $0.11  $0.22  
Weighted-average shares used to compute earnings (loss) per share attributable to common stockholders:      
Basic102,045,087  99,590,187  101,801,666  99,278,599  
Diluted104,637,548  102,817,838  104,018,782  103,597,316  











Stitch Fix, Inc.
Condensed Consolidated Statements of Cash Flow
(Unaudited)
(In thousands)
  For the Six Months Ended
  February 1, 2020 January 26, 2019
Cash Flows from Operating Activities
Net income (loss)$11,253  $22,654  
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Deferred income taxes(4,865) (2,288) 
Inventory reserves2,831  4,853  
Stock-based compensation expense27,881  14,747  
Depreciation, amortization, and accretion10,347  6,456  
Other71  —  
Change in operating assets and liabilities:
Inventory(31,586) (22,928) 
Prepaid expenses and other assets5,167  1,546  
Operating lease right-of-use assets and liabilities141  —  
Accounts payable(4,870) 7,012  
Accrued liabilities15,254  17,689  
Deferred revenue(729) 3,822  
Gift card liability3,160  3,512  
Other liabilities4,187  592  
Net cash provided by operating activities38,242  57,667  
Cash Flows from Investing Activities
Purchases of property and equipment(11,446) (11,903) 
Purchases of securities available-for-sale(129,925) (185,994) 
Sales of securities available-for-sale14,095  1,163  
Maturities of securities available-for-sale81,675  9,500  
Net cash used in investing activities(45,601) (187,234) 
Cash Flows from Financing Activities
Proceeds from the exercise of stock options, net5,658  1,931  
Payments for tax withholding related to vesting of restricted stock units(5,256) (2,281) 
Net cash provided by (used in) financing activities402  (350) 
Net increase (decrease) in cash, cash equivalents, and restricted cash(6,957) (129,917) 
Effect of exchange rate changes on cash2,014  (103) 
Cash, cash equivalents, and restricted cash at beginning of period170,932  310,366  
Cash, cash equivalents, and restricted cash at end of period$165,989  $180,346  
Components of Cash, Cash Equivalents, and Restricted Cash
Cash and cash equivalents$165,989  $167,496  
Restricted cash – current portion—  250  
Restricted cash – long-term portion—  12,600  
Total cash, cash equivalents, and restricted cash$165,989  $180,346  
Supplemental Disclosure
Cash paid for income taxes$90  $191  
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Purchases of property and equipment included in accounts payable and accrued liabilities$4,474  $4,741  
Capitalized stock-based compensation$893  $812  
Vesting of early exercised options$—  $178  
Leasehold improvements paid by landlord$7,406  $—  




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 is frequently used by investors and securities analysts in their evaluations of companies, and that this supplemental measure facilitates comparisons between companies. We also provide adjusted EBITDA excluding the impact of stock-based compensation expense (“ex. SBC”), which management believes provides useful information to investors and others in understanding our operating performance and facilitates comparisons between companies. We believe free cash flow is an important metric because it represents a measure of how much cash from 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 ex. SBC 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 and adjusted EBITDA ex. SBC 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 and adjusted EBITDA ex. SBC does not reflect our tax provision, which reduces cash available to us;
•adjusted EBITDA and adjusted EBITDA ex. SBC excludes interest (income) expense and other (income) expense, net, as these items are not components of our core business; 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 and Adjusted EBITDA ex. SBC
We define adjusted EBITDA as net income (loss) excluding interest (income) expense, provision (benefit) for income taxes, other (income) expense, net, and depreciation and amortization. We define adjusted EBITDA ex. SBC as adjusted EBITDA excluding stock-based compensation expense. The following table presents a reconciliation of net income (loss), the most comparable GAAP financial measure, to adjusted EBITDA and adjusted EBITDA ex. SBC for each of the periods presented:
  For the Three Months EndedFor the Six Months Ended
(in thousands) February 1, 2020January 26, 2019February 1, 2020January 26, 2019
Adjusted EBITDA ex. SBC reconciliation:        
Net income (loss) $11,431  $11,976  $11,253  $22,654  
Add (deduct): 
    Interest (income) expense (1,477) (1,170) (3,130) (2,569) 
Provision (benefit) for income taxes (1,484) 5,058  (327) 6,796  
Other (income) expense, net28  (453) 862  (573) 
Depreciation and amortization 5,804  3,790  10,770  7,184  
Adjusted EBITDA14,302  19,201  19,428  33,492  
Add (deduct):
Stock-based compensation expense15,755  8,110  27,881  14,747  
Adjusted EBITDA ex. SBC $30,057  $27,311  $47,309  $48,239  






Free Cash Flow
We define free cash flow as cash flows provided by operating activities reduced by purchases of property and equipment that are included in cash flows used in investing activities. The following table presents a reconciliation of cash flows provided by operating activities, the most comparable GAAP financial measure, to free cash flow for each of the periods presented:
  For the Six Months Ended
(in thousands) February 1, 2020January 26, 2019
Free cash flow reconciliation:    
Cash flows provided by operating activities $38,242  $57,667  
Deduct: 
Purchases of property and equipment (11,446) (11,903) 
Free cash flow $26,796  $45,764  
Cash flows used in investing activities $(45,601) $(187,234) 
Cash flows provided by financing activities $402  $(350) 

Operating Metrics
February 1, 2020November 2, 2019August 3, 2019April 27, 2019January 26, 2019
Active clients (in thousands)3,465  3,416  3,236  3,133  2,961  
Net revenue per active client(1)
$501  $485  $488  $467  $463  
(1) Fiscal year 2019 was a 53-week year, with the extra week occurring in the quarter ended August 3, 2019. Net revenue per active client calculations including the fourth quarter of fiscal year 2019 include 53 weeks of revenue. The 53rd week of fiscal 2019 contributed approximately 2.0% of the increase to net revenue per active client as of February 1, 2020.
Active Clients
We define an active client as a client who checked out a Fix or was shipped an item using our direct-buy functionality 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 Men’s, Women’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.

IR Contact:

David Pearce
ir@stitchfix.com
PR Contact:

Suzy Sammons
media@stitchfix.com