Stitch Fix swings to a £26.80 million net loss in Q3 as Coronavirus disrupts the supply chain

Stitch Fix (NASDAQ: SFIX) released its quarterly financial results on Monday that reported a wider than expected net loss in the fiscal third quarter. The company attributed its downbeat performance to the Coronavirus pandemic that disrupted its supply chain and backlogged orders. Stitch Fix laid off 1,400 employees last week.

As COVID-19 pushed the company into shutting down some of its buildings, its warehouse capacity in the United States reduced by roughly 70% as of March-end. Shares of the company were reported about 7% down in extended trading on Monday. At £18.35 per share, Stitch Fix is about 8% down year to date in the stock market after recovering from a low of £9 per share in early April.

Stitch Fix’s Q3 financial results versus analysts’ estimates

According to Refinitiv, analysts were anticipating the company to print £321.52 million in revenue in the quarter that ended on 2^nd May. In terms of loss per share, their estimate was capped at 12.65 pence. In its report on Monday, Stitch Fix posted a lower £293.85 million in Q3 revenue and a broader 26.09 pence of loss per share.

The company expressed confidence in its report on Monday that backlogged orders will be cleared before the start of July.

CEO Katrine Lake anticipates the online personal styling company’s revenue to recover back to the growth zone in the fourth quarter. The CEO also highlighted that many of Stitch Fix’s warehouses have now returned to work after strict COVID-19 restrictions. Recording a gross margin of 40.8% in the recent quarter, Lake forecast a 2% to 3% increase in Q4.

Stitch Fix posts a broader than expected net loss in Q3

At £26.80 million, the San Francisco-headquartered company’s net loss came in significantly higher than a net income of £5.53 million in the same quarter last year. Stitch Fix’s revenue was registered at a much a higher £323.26 million in last year’s Q3.

Other prominent figures in Stitch Fix’s report on Monday include a 9% decline in sales as compared to a much wider 80% decline in the broader apparel and accessories market. The company saw a 9% growth in its active client base in the third quarter with its per-user (active) net revenue climbing 6%.

Stich Fix boasted to have concluded the fiscal Q3 with £260.09 million in cash and equivalents, and highly rated securities.

At the time of writing, the £2.02 billion company has a price to earnings ratio of 101.88.