If you read back on the last five or six posts on this SFIX thread, it’s mostly generalities and speculations at this point without new figures to back it up.
Let’s wait until there is some new news, if you guys wouldn’t mind, or some some genuine attempts to analyze the company like Karen’s posts, and Wouter’s and Bear’s early posts on the thread.
There are now 20 posts, and a lot without any substance.
Thanks for your cooperation,
Saul
Taking into account Saul’s admonition, I believe Karen deserves a reply to a good question:
What would it take (as specific as possible) for the Stitch Fix business model to be proven? I’m curious about what Stitch Fix needs to do or accomplish to win the support of more investors.
The second part was answered (sort of) by nilvest in post #60412
“therefore, this stock is no longer in growth investors list and they are not yet making enough cash to get on value investors list… so its going to be in flunk for a while…”
In bricks and mortar retail there is a maximum number of stores at which growth slows (the "S"curve again) and that number depends on the kind of retail, low cost eateries can host the most in the thousands, clothing retail usually less than 1000. It also depends on the economic level of the customers, off-price can host more than high fashion.
After reading some excellent posts in this thread I would be quite cautious based on bricks and mortar experience but Stitch Fix is trying to disrupt that model making the outcome less predictable. The old standby is to read the earnings reports 10-Q and 10-K and maybe to have a small starter position to have skin in the game.
Denny Schlesinger
PS: I wrote a post showing the number of stores of various businesses at Emerging Retail and Apparel but I can’t find it. The subject kept coming up, here is one example:
Retailers closing locations
This really should not come as a surprise. Each retail chain has a maximum number of stores beyond which they hit the dreaded Law of Diminishing Returns. In good times the number of stores can be expanded to marginal areas but in bad times these stores effectively fail. The idea behind “Emerging Retail and Apparel” is to take advantage of the best and safest growth period, from the time the concept is firmly established until they hit their optimum number of stores. Of course you can make money earlier as well as later but with added risk.
https://discussion.fool.com/retailers-closing-locations-30526172…
A different method of estimating TAM is needed for Stitch Fix.
At this stage of their growth phase, the revenue growth outpacing the customer growth is worrisome. Keep an eye on that
Sorry to continue this thread, but this statement needs to be called out. My hope as an SFIX investor is that revenue grows more quickly than user growth. If user growth is greater than revenue growth, it means the average spend per customer is decreasing. If existing customers are spending less, that is a troublesome sign that their AI is not effective, and customers aren’t getting better service over time. The truth is quite the opposite. Average spend per customer is up 7% (keeping consistent weeks per quarter). The fact that customers spend more over time is a very positive thing for investors and should not be viewed negatively.
If you are concerned that user growth is slowing, then Q4 should be viewed positively as the user growth increased sequentially from 16.6% to 18.0%.
Also, an SA article on the cheapness of SFIX shares is out: https://seekingalpha.com/article/4294705-stitch-fix-bargain-…
I agree that with the current market cap and cash of $367M, this is very cheap given this year’s revenue will be over $1.9B.
I’d like to take a real look at whether having a female CEO is a headwind to Stitch Fix’s stock price, and I think it is.
Gender Bias in Science – this article shows the differences towards a male and female candidate with an equal profile.
https://blogs.scientificamerican.com/unofficial-prognosis/st…
Hiring John over Jennifer
https://www.aauw.org/2015/06/11/john-or-jennifer/
Gender Bias in a performance-driven industry
https://news.yale.edu/2017/10/24/study-shows-gender-bias-per…
Would the market feel more confident in a 36-year-old founder named Kevin?
Would the market have more faith in that leader growing revenues, growing the number of customers, growing the average revenue per customer, and proving a fast payback on the ad spend?
Would the market put more trust in a 36-year-old Kevin, after proving his company profitable and targeting 10% net margins in the long term, spending more money to hire top talent and expand the business internationally?
Gender bias in performance-driven industry
https://news.yale.edu/2017/10/24/study-shows-gender-bias-per…
Previous research has established that women tend to be held to unfairly high standards compared to men of similar ability and must outperform their male colleagues to receive equal recognition.
I think that if the market hates Stitch Fix when it’s going well, it will hate it even more if anything goes wrong.
Karen
The stocks of AMD (Lisa Su), ULTA (Mary Dillon) EBAY (Meg Whitman)and PEP (Indra Nooyi) just off the top of my head should allay your fears. These stocks have all acted well when the company’s performance outperformed regardless of women being at the helm.
Rob
None of them are young founders. I am aware that there have been other female CEOs.
It was interesting to me to see someone’s reaction on the ULTA board when ULTA had a rough day and was slammed (was it 30%?)
"Mary has been over-promising and under-delivery for far too many quarters. Wall St’s grace and patience has run out.
Until Mary is run out, ULTA will flounder and see continuing price decay."
What do you think of that kind of reaction? Running out the CEO is the only way to fix the company?
Karen
So, I’ve never seen anybody say that to fix a company, Mike needs to be run out of the CEO job after a quarter with these headlines:
Net Sales Increased 12.0%
Comparable Sales Increased 6.2%
Diluted EPS Increased 12.2% to $2.76
Company Updates Fiscal 2019 Guidance
But apparently, for some, Mary’s performance is totally unsatisfactory and she’s the problem here.
Karen
Regardless of how we feel about the arguments, this is not a board for discussing whether female CEOs get their due or are discriminated against. Please end this conversation now.
Bear
Assistant Board Manager