Shares of Stitch Fix are soaring more than 30 percent Tuesday, on pace for its best day ever, after the personal styling company reported better-than-expected second-quarter earnings after the bell Monday.
“We had 6 percent higher net revenue per client than we did a year ago,” Stitch Fix founder and CEO Katrina Lake told CNBC’s “Squawk Alley” Tuesday morning.
Lake attributed some of the quarter’s success to new algorithm applications. Stitch Fix is using the data they obtain from styling reviews and quizzes on the app called “style shuffle” to predict inventory demand.
Since becoming a public company, Stitch Fix has posted six consecutive quarters of more than 20 percent revenue growth.
“Our aspiration was to the drive this 20 to 25 percent year-over-year growth in revenue in a retail backdrop that’s not all that exciting right now,” said Lake.
Stitch Fix is planning to invest $15 million to $20 million on a brand campaign and a launch in the U.K., which is expected to affect earnings projections.
“It’s something we really expect to impact the business over a longer term,” said Lake. “The metrics we are looking for are really going to be around awareness and understanding of the brand.”
The stock is continuing to soar after jumping more than 20 percent in extended trading Monday.
Beating on the top and bottom lines, Stitch Fix posted earnings per share of 12 cents on revenue of $370 million. Wall Street expected earnings of 5 cents on revenue of $365 million, according to Refinitiv.
“Q2 was another strong quarter for us, delivering net revenue of $370.3 million, exceeding our guidance and representing 25% year-over-year growth,” said Lake in a company release.
Stitch Fix’s active clients came in at 2.96 million, outpacing estimates of 2.95 million. This is an increase of 18 percent year over year.
“We launched our first integrated brand campaign in February to increase awareness and consideration with new and existing clients and we’re excited to connect even more people to the power of personalized styling,” said Lake.
Stitch Fix issued strong third-quarter and full-year forecasts. The company estimates third-quarter revenue will be between $388 million and $398 million, compared to the $384 million forecast by Refinitiv.
The company sees 2019 revenues between $1.53 billion and $1.56 billion, topping estimates of $1.51 billion.
Stitch Fix’s stock is up more than 130 percent since the company’s initial public offering in November 2017.