Stitch Fix stock surges to record high after surprise profit

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Shares of Stitch Fix surged on Tuesday after the personal styling service posted a surprise, pandemic-fueled quarterly profit while projecting a financial growth spurt.

The San Francisco-based firm’s stock price surged as much as 53 percent to an all-time intraday high of $54.94 on the heels of its better-than-expected earnings report for the August-to-October quarter.

Stitch Fix — which sends customers packages of clothes customized to their style that they can either buy or return — has thrived in recent months as the coronavirus pandemic pushed more consumers to shop online and put pressure on brick-and-mortar retailers.

The nine-year-old company set a record for customer growth last quarter, adding 241,000 active clients compared to the preceding three-month period. And nearly 80 percent of its customers bought at least one item in their first package of clothes in each of the last two quarters, the highest level it’s seen in five years.

“While the apparel industry is currently contracting, we expect to take share and drive higher new client sign-ups as the relevance of our model of personalized discovery and convenience grows,” Stitch Fix executives Katrina Lake, Mike Smith and Elizabeth Spaulding said in a Monday letter to shareholders.

Stitch Fix reported a net profit of $9.5 million, or about 9 cents a share, for the latest quarter, far exceeding Wall Street’s expectations for a quarterly loss of about 17 cents per share, according to Bloomberg data. Revenues jumped 10 percent from the year-earlier quarter to about $490 million, also beating analysts’ estimates of $481 million.

The company expects that growth to continue, with revenues for the fiscal year ending in July projected to climb 20 to 25 percent from the prior year’s levels.

Stitch Fix also announced Monday that longtime Amazon executive Dan Jedda will take over as chief financial officer on Wednesday. Jedda spent 15 years at the Seattle-based e-commerce titan, most recently serving as vice president and CFO of its digital, advertising and corporate development divisions.