By Dhirendra Tripathi
Investing.com – Stitch Fix stock (NASDAQ:SFIX) plummeted 11% Wednesday after the company lowered its prior full year revenue outlook, reflecting how tough it is for the platform to attract new clients to its online styling service.
Stitch also withdrew its full-year outlook for adjusted basic operating income.
The company that uses algorithms to help customers style their wardrobe faces increasing competition, including from the likes of Amazon (NASDAQ:AMZN).
For the ongoing financial year that ends July 30, the company now expects revenue to be flat to slightly down year-over-year.
“This full year outlook assumes that the number of active clients is flat through the end of the fiscal year. We are actively evaluating our marketing spend as we manage improvements to onboarding and conversion,” CEO Elizabeth Spaulding said in a statement.
Net revenue in the current quarter is seen between $484 million and $500 million. Margins could be negative, according to the company.
Stitch’s revenue per active client rose around 18% to $549 across about 4 million clients. The active client base grew 4% year-on-year.
Net revenue in the second quarter rose 3% to around $517 million. Margins expanded due to tight control on selling, general and administrative expenses, and lower spending on advertising.
Net loss widened to almost $31 million from $21 million in the same period a year ago.