Subscription apparel retailer Stitch Fix continued its growth streak with a 29% year-over-year revenue increase to $408.9 million for its fiscal third quarter ending April 27 from $317.0 million a year ago. It continues to post a profit, reporting an income of $7.0 million, which is down 30% from $10.0 million during the same period last year. Stitch Fix is No. 64 in the Internet Retailer 2019 Top 1000.
Stitch Fix attributes the increase in part to its growing active customer base, which increased 17% this quarter to 3.1 million shoppers, according to CEO Katrina Lake. And shoppers are also spending 8% more than last year, she said.
“One measure we look at is the number of clients who keep at least one item in their Fix and tell us that they are looking forward to their next Fix,” Lake said in a call with investors, according to a transcript by Seeking Alpha. A Fix is what Stitch Fix calls its personalized subscription boxes. “This number grew 8% year over year in women’s in Q3, which is the fourth-consecutive quarter of year-over-year growth. And, surprisingly, we found these positive first Fix experiences are often indicative of stronger client retention, stronger revenue per client and higher engagement.”
Lake said new women’s clients in 2019 so far have higher retention rates when compared with comparable new shoppers in 2018. In the newer menswear offerings, Stitch Fix has expanded its line of exclusive brands. Exclusive brands generate more than a third of revenue for the men’s category.
“We’ve created multiple brands that look and feel like standalone brands, each with its own identity and strong point of view,” Lake said. “Each brand was created to address specific gaps in the market, both in style and price and we’re thrilled at how successful these brands have become. Our exclusive brands have very high sell-through, which drives rapid inventory turn that contributes to its stronger gross margin profile.”
Another margin improvement comes from spreading out the inventory of menswear, which is now in three of its five distribution centers. This has reduced shipping costs, Lake said. Overall, Stitch Fix’s margin reached 45.1% for Q3, up from 43.6% last year.
In other earnings news:
- Jewelry parent company Signet Jewelers Ltd. (No. 109) grew ecommerce sales 12.6% for its fiscal first quarter 2020 ending May 4, but it didn’t break out exact figures. Signet, the owner of Kay Jewelers, Jared and Zales, said shoppers’ doubled use of online customization options in the last year. However, the retailer said sales tax regulations continued to slow down Signet’s online-only brand, James Allen, which started collecting sales tax in California this quarter. JamesAllen.com’s revenue was down 2.4% for the quarter to $52.0 million.
- Online sales now make up 30% of revenue at apparel retailer American Eagle Outfitters Inc. (No. 70), chief financial officer Robert Madore said in an earnings call transcribed by Seeking Alpha. That’s $265.9 million in online sales for its fiscal first quarter ending May 4, which represents a “low double-digits” increase year over year, Madore says. Mobile sales generated more than half of ecommerce revenue for the quarter.