Last week, Stitch Fix saw its shares jump after releasing better-than-expected fiscal third-quarter earnings results. The company’s revenue reached $408.9 million which is up 29% in 2019.\
And the company posted a profit of 7 cents per share, which beat investor expectations. The online clothing seller’s customer base increased by 17% to reach 3.1 million active clients.
Stitch Fix uses a combination of human insights and AI to deliver personalized clothing choices to its customers. CEO Katrina Lake said the company’s growth is due to its ability to attract and retain clients and the strength of its women’s category.
Things to like about Stitch Fix
One of Stitch Fix’s biggest advantages is its large amount of customer data. This allows the company to do a better job personalizing its clothing selections for clients.
Stitch Fix does this through Style Shuffle, a game that lets customers rate a wide variety of clothing choices and styles. The more styles customers rate, the more insights Stitch Fix can gain about their preferences.
This helps Stitch Fix to continue to generate strong customer loyalty. According to Lake, the personal relationship between the customer and the stylist is what makes the company successful. And the data seems to support this since the company’s average revenue per customer continues to increase.
Stitch Fix also continues to expand its reach and launched in the U.K. just last month. The company also continues to expand its offerings and launches a new product category every year. In addition to its women’s line, the company also offers maternity clothes, a men’s line, and clothes for kids.
Can Stitch Fix sustain its growth?
In spite of the company’s recent momentum, there are still some questions about Stitch Fix. For instance, some analysts question the company’s ability to sustain its growth.
Many consumers are still skeptical regarding online subscription services. A recent report found that up to 85% of internet users have never tried a retail subscription service. Of the customers surveyed, 53% were concerned about overspending and 52% worried they wouldn’t get the correct items.
However, Stitch Fix is not your typical subscription company. Customers have a lot of options about when they receive their orders. They can make a one-time purchase, receive orders at regular intervals, or put their orders on pause for a period of time.
The company’s stock is up 63% year-to-date and has consistently outperformed the S&P 500. And the company offers a uniquely personalized approach to retail, which is what many customers are looking for.