This Online Apparel Stock Is a Marvelous Bargain

: SFIX | Stitch Fix, Inc. -  News, Ratings, and Charts

SFIX – Separating this online apparel stock from other online ‘box’ services is the fact it has been posting a profit each quarter since it went public two years ago. Continue reading to find out what it is, and what it could mean for the investor.

Get Free Updates

Join thousands of investors who get the latest news, insights and top rated picks from StockNews.com!

Stitch Fix (SFIX) sells a range of apparel, shoes, and accessories through its website and mobile app with an emphasis on customizing style and fit to each individual.

The business model of creating subscription services, which delivers everything from meals to plants to clothing, went from hot to not over the past few years as companies such as Blue Apron (APRN) found profitability to be elusive due to high customer acquisition costs and churn rates.

For starters, separating Stick Fix (SFIX)  from other online ‘box’ services is the fact it has been posting a profit each quarter since it went public two years ago.

In the latest quarter reported Octr 2, the company had revenue of $432 million, a 35% increase, and active clients grew 18% from a year earlier to 3.2 million.

But guidance for the fiscal first quarter ending Nov 2 was light, as the company expects recent success with lower-priced items and less spending on marketing to drag on revenue in the early part of the fiscal year and investors punished a stock that had already lost some 55% of its value over the prior 52-weeks.

Following the report, shares sank an additional 10% to a new 52-week low before mounting a recovery in recent days.

I think the stock is still a bargain and bears, a whopping 32% of the shares are sold short, are dead wrong and will be running for cover and licking their wounds in the coming months.

A key difference between Stitch Fix and other apparel companies is SFIX is approaching its business like a software company: analyzing cohorts, becoming smarter over time about how to acquire, retain, and monetize.

While investing in data science personnel and increasing its advertising expenses, SFIX has remained profitable for the past five years.

The company has improved its CRM strategy for a decade and has a clear first-mover advantage, thanks to its narrow industry focus.

Stitch Fix continues growing its revenue in a way not matched by any companies in the apparel industry, not even by best-of-breed Lululemon (LULU).

As you can see, revenue is growth is accelerating at a rapid rate:

The market opportunity isn’t petite: Stitch Fix pegs its addressable market in the U.S. and U.K. at $431 billion. Still, competition is intensifying, particularly from the likes of Amazon (AMZN)  which has launched a try-before-you-buy Prime Wardrobe platform thru a service called Personal Shopper in late July for women. The list of other competing services includes Trunk Club and plus-size Dia & Co, among others.

I view the competition as confirmation that the direct to consumer, and customized clothing not a fad but will increasingly be a way that people replenish and freshen their wardrobe.

The stock’s recent drop-off offered “one of the best risk/reward opportunities” in small-to-mid-cap internet.


SFIX shares were trading at $21.75 per share on Wednesday afternoon, up $0.90 (+4.32%). Year-to-date, SFIX has gained 27.27%, versus a 20.96% rise in the benchmark S&P 500 index during the same period.


About the Author: Steve Smith


Steve has more than 30 years of investment experience with an expertise in options trading. He’s written for TheStreet.com, Minyanville and currently for Option Sensei. Learn more about Steve’s background, along with links to his most recent articles. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
SFIXGet RatingGet RatingGet Rating

Get Free Updates

Join thousands of investors who get the latest news, insights and top rated picks from StockNews.com!

Top Stories on StockNews.com

NASDAQ: VOD | Vodafone Group Plc each representing ten Ordinary Shares News, Ratings, and Charts

10 Perfect Stocks for November

Are GM and VOD perfect stocks? Well they do provide the right amount of growth, value, income and momentum that should keep them moving higher. Discover why and the full list of 10 perfect stocks below.
NYSE: SPY | SPDR S&P 500 News, Ratings, and Charts

5 Simple Steps to a Winning Portfolio

A poorly constructed portfolio will end up underperforming the market. You'd just be better investing in SPY and calling it a day. If you want to do better than that, then read on...
NASDAQ: GWPH | GW Pharmaceuticals Plc News, Ratings, and Charts

Why Investors Should Remain Bullish On GW Pharmaceuticals (GWPH)

GW Pharmaceuticals (GWPH) reported third-quarter earnings after the close of trade on Tuesday.
NYSE: ORCL | Oracle Corporation  News, Ratings, and Charts

Why Oracle Is 'The Sleeping Giant' of the Cloud

Today’s featured article talks about “the sleeping giant” of the cloud. Continue reading for more details on the company, and how it could impact the tech space.
: .INX | S&P 500 Index News, Ratings, and Charts

3100 Probably the End of the Line for Stocks

The S&P 500 is racing towards 3,100 thanks to news of tariffs being lowered in the trade war with China. However that level is looking like a pretty stiff point of resistance. Let's discuss the outlook for stocks and our trading strategy.

Read More Stories


More Stitch Fix, Inc. - (SFIX) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All SFIX News
Page generated in 1.1911 seconds.Array ( [0] => SFIX )