Stitch Fix (SFIX) Boosts Shareholder Value Via Buyback Plan


Stitch Fix, Inc. SFIX recently informed that its board authorized a share repurchase program wherein the retailer can buyback up to $150 million of the Class A common stock. This move demonstrates strength in SFIX’s strategy, value proposition and growth potential.

As of Oct 30, 2021, SFIX had 83,193,536 shares of Class A common stock and 25,601,420 shares of Class B common stock outstanding. Per this program, repurchases will be funded by Stitch Fix’s cash and cash equivalents or future cash flow.

Stitch Fix had $400.5 million of cash, cash equivalents and marketable securities as of Oct 30, 2021. SFIX generated $141.7 million cash from operating activities during first-quarter fiscal 2022. Also, SFIX reported a free cash flow of $125.3 million for the same period.

Per this renowned online personal styling service retailer, repurchase will be made on a discretionary basis from time to time via open market repurchases, privately negotiated deals or other modes. This repurchase plan has no expiration date and can be further modified or terminated at any time.

We note that Stitch Fix remains committed to creating a long-term value for its shareholders. In addition, management is focused on enhancing the clients’ experience and intends to become the global destination for personalized shopping and styling.

What’s More?

Stitch Fix remains on track with its efforts to boost assortments and improve client experience. Management is steadily expanding its assortments to include more affordable products across categories. It is on track to significantly transform its business in several areas, including the expansion of Shop to the existing client base, the launch and scale of Fix Preview, and investments in systems and people.

SFIX is constantly leveraging product innovation, evolving assortments and using personalized experiences to gain more clients. The expansion of personalized direct purchases for the clients is also impressive. Also, Stitch Fix’s Freestyle drive offers quite a distinct shopping experience. The platform allows customers to discover and buy curated items according to their style preferences, fit and size. Customers can buy items directly from Stitch Fix, irrespective of ordering a Fix first. Management is also optimistic about the Fix Preview capability.


Image Source: Zacks Investment Research

This presently Zacks Rank #3 (Hold) player’s shares have inched up 2.3% in the past month against the industry’s 10.9% fall.

Hot Stocks in Retail

Some better-ranked stocks are Zumiez ZUMZ, Tapestry TPR and Costco COST.

Zumiez, a global lifestyle retailer, currently flaunts a Zacks Rank of 1 (Strong Buy). Shares of ZUMZ have rallied 19.7% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Zumiez’s fiscal 2022 sales suggests growth of 1.1% from the year-ago reading. ZUMZ has a significant trailing four-quarter earnings surprise, on average.

Tapestry, the leading accessories’ designer, presently flaunts a Zacks Rank #1. TPR has a trailing four-quarter earnings surprise of 29%, on average. The stock has rallied 21.1% in the past year.

The Zacks Consensus Estimate for Tapestry’s fiscal 2022 sales and earnings per share (EPS) suggests growth of 14.8% and 17.9%, respectively, from the corresponding year-ago levels. TPR has an expected EPS growth rate of 12.3% for three-five years.

Costco, a general merchandise retailer, has a Zacks Rank #2 (Buy) at present. Shares of COST have surged 48.6% in the past year.

The Zacks Consensus Estimate for Costco’s fiscal 2022 sales and EPS suggests growth of 7.6% and 9.5%, respectively, from the year-ago corresponding figures. COST has a trailing four-quarter earnings surprise of 8.3%, on average.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.




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