(Reuters) - Online personal styling provider Stitch Fix Inc on Monday raised its full-year revenue forecast after reporting better-than-expected quarterly results, sending its shares surging about 24 percent in extended trading.
The company also reported an 18 percent jump in the number of active clients for the second quarter, after warning that it did not expect user growth during the period.
The San Francisco-based company, which sends customers packages of clothing chosen by its personal stylists, now expects full-year revenue to be between $1.53 billion and $1.56 billion, up from $1.49 billion to $1.53 billion it previously forecast.
“We expect net revenue growth to be driven through a combination of active client and revenue per active client growth for the second half of fiscal 2019,” the company said in a letter to shareholders.
The company, which had its initial public offering in November 2017, has been heavily expanding in increasingly popular areas in the broader retail sector such as men’s, kids, plus and petite sizes as well as maternity wear.
Active clients, which indicate the number of users who have received a package of curated clothing in the preceding 12-month period, rose to 3 million in the second-quarter ended Jan. 26.
The company said in December that it did not expect to increase the number of its active subscribers in the holiday quarter, as customers focused on gift-buying rather than themselves.
Chief Operating Officer Mike Smith said social media advertising and customer acquisition costs have increased slightly, as certain platforms have raised their prices.
“We intentionally have multiple marketing channels and not any one channel represents more than 50 percent of spend in order to offset any inflation,” Smith said.
In order to measure return on investment on these ad dollars, Smith underscored the company’s ability to use data to determine what types of clients are coming in from different channels and what their behavior is long-term.
“We look at contribution margin over time, making sure that those clients are very profitable and we’re getting fast paybacks,” he added.
Net revenue per active client saw an increase of 6.1 percent during the quarter to $463, boosted by its core women’s category. Stitch Fix recently introduced its services in the UK.
Net income attributable to common stockholders rose to $12 million, or 12 cents per share, from $1.7 million, or 2 cents per share, a year earlier.
Net revenue rose 25 percent to $370.3 million.
Analysts had forecast earnings of 5 cents per share and revenue of $364.9 million, according to IBES data from Refinitiv.
The company’s shares were up 24 percent at $33.62 in after-hours trade and have gained about 58 percent since the beginning of the year.
Reporting by Melissa Fares in New York and Soundarya J in Bengaluru; editing by Sriraj Kalluvila and Cynthia Osterman
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