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On Wednesday, Mizuho (NYSE:MFG) Securities reiterated its Underperform rating on Stitch Fix , Inc. (NASDAQ:SFIX) with a steady price target of $3.00. The decision came after the company, currently valued at $537 million, reported a fiscal second quarter that surpassed expectations and increased its annual guidance. Despite a 16% year-over-year decline in active customers and overall revenue dropping 14.7%, revenue declines were less than anticipated. Positive developments were noted in the Men’s category and the freestyle segment, which may have been boosted by new holiday advertising campaigns. According to InvestingPro, the company maintains strong liquidity with a current ratio of 1.73.
Stitch Fix’s management highlighted January as a particularly strong month, with the positive trend continuing through February and into March. This performance comes against a backdrop of growing concerns over consumer spending and the looming threat of a recession, which had not suggested an improving business model for Stitch Fix in analysts’ projections. The stock has shown significant volatility, as evidenced by its beta of 2.13, though it has delivered an impressive 80.8% return over the past year despite a slight decline of 1.9% year-to-date.
The analysts at Mizuho acknowledged the recent sequential improvements in Stitch Fix’s performance but attributed these primarily to the low base of the company’s struggling core business. They also noted that some of the new initiatives have begun to show early positive results. In response to the latest developments, Mizuho has adjusted its estimates for the company.
Despite the improved quarterly results and raised guidance, the analysts remain cautious about Stitch Fix’s future. They pointed out the challenges that lie ahead as senior management works on a complex turnaround strategy in a volatile demand environment. The company’s recent gains are seen as a step in the right direction, but the analysts suggest that the path forward will continue to be challenging for Stitch Fix.
In other recent news, Stitch Fix announced its second-quarter 2025 financial results, surpassing expectations with an earnings per share (EPS) of -$0.05, better than the forecasted -$0.17. The company’s revenue reached $312.1 million, exceeding the anticipated $297.3 million, despite a 5.5% decline year-over-year. Stitch Fix also raised its full-year revenue guidance to between $1,225 million and $1,240 million, with an expected adjusted EBITDA of $40-$47 million. The company reported a gross margin improvement to 44.5%, showcasing effective cost management. However, active clients decreased by 16% year-over-year, while revenue per active client increased by 4% to $537. In a strategic move, Stitch Fix launched new private brands and expanded product categories, which are reportedly performing well. Analysts noted the company’s resilience in a challenging retail environment, with firms like Bernstein and Telsey Advisory Group showing interest in the company’s tariff mitigation strategies and product offerings.
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