What Investors Missed in Stitch Fix's Earnings Report

Investors sent shares of Stitch Fix (NASDAQ: SFIX) cratering just after its second-quarter earnings report, which included a sour forecast for fiscal 2022 around growth and profits. The apparel retailer is struggling to convince new users to sign up for its online-styling plans even as it expands its popular direct-purchasing platform.

The stock recovered much of its early losses as Wall Street got a clearer picture from CEO Elizabeth Spaulding and her team during their conference call with investors. Let's take a look at the details that paint a more encouraging picture of Stitch Fix's long-term opportunities.

The initial bleak takeaway from the fiscal Q2 announcement was that Stitch Fix has a major growth challenge on its hands. New-user gains slowed to just 4% compared to 11% in the previous quarter. Management said in a press release that this slump reflected "challenges with onboarding and conversion of clients."

Source Fool.com