By Mackenzie Tatananni

Stitch Fix stock skyrocketed Wednesday after the personal styling service reported a narrower-than-anticipated decline in revenue and active customers.

Shares of Stitch Fix rose 50% to $6.92, on track for their highest close since Aug. 18, 2022, according to Dow Jones Market Data.

The dramatic gains are in sharp contrast to the stock's behavior after the last earnings report in September, when shares plummeted nearly 40%, marking the worst same-day drop on record.

For the first quarter of fiscal 2025, which ended Nov. 2, the company reported net revenue of $319 million, marking a 12.6% decline from the prior year and surpassing Wall Street's consensus estimate of $307 million, according to FactSet. The company's revenue beat its own guidance of between $303 million and $310 million.

Active clients fell 19% to 2.43 million in the fiscal first quarter, slightly beating expectations for a drop to 2.42 million.

Mizuho Securities said the company saw its lowest sequential decline in active clients over the last several quarters.

"We are encouraged by very early wins, particularly with new brands and as every core aspect of the business is being tested," analyst David Bellinger wrote.

However, the company has a way to go, in his view. "Much work remains ahead, and we see an uphill battle from here before getting more constructive," Bellinger added. He reiterated an Underperform rating for the stock with a price target of $3.

Analysts at William Blair commended the company's "better delivery and positioning of fall goods," writing that it was one of the largest catalysts of sales upside in the quarter.

Rather than wait for cold weather to prod customers into buying a jacket, the company sent reminders to its subscribers along with tailored suggestions, the analysts explained.

"Indeed, there is an inherent advantage in the model, albeit one that has historically been hard to see the benefits of, in being able to leverage a deep pool of customer data," the firm wrote. William Blair rates the stock a Market Perform.

The company's full-year fiscal 2025 outlook went unchanged. Stitch Fix anticipates revenue between $1.14 billion and $1.18 billion.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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December 11, 2024 13:56 ET (18:56 GMT)

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