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Stitch Fix Stays in Fashion

When Stitch Fix Inc. had its initial public offering in November, it was shadowed by the failure of Blue Apron Holdings Inc., another subscription service, and the threat ofAmazon.com Inc.

Investors, concerned about deceleration, questioned just how many people would be interested in what is a fairly unique way of shopping.

Yet in its second earnings report as a public company, Stitch Fix continues to prove that there is a market for its service.

It added 100,000 clients in the quarter, reaching 2.5 million, a growth rate of 31% year-over-year. Net revenue reached $295.9 million, beating analysts’ estimates of $291 million, and notching the company’s fourth consecutive quarter of revenue growth in the 25% range year-over-year.

The stock, which was initially offered at $15 a share, has gained 63% since November. It rose 6% on Monday in anticipation of strong numbers, closing at $24. Yet shares fell 6% in aftermarket trading, a reflection of the company’s earnings miss. It posted adjusted earnings of 2 cents per share, beneath analysts’ 6-cents estimate. The company incurred a one-time tax expense of $4.7 million. Gross margins have also come down as it has expanded into new categories and lowered its prices.

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