3 things investors should know before Stitch Fix reports third-quarter results on Monday

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Source: Stitch Fix

Investors are preparing for what could be another rollercoaster in Stitch Fix shares when the subscription styling service reports fiscal third-quarter results after the bell on Monday.

The company’s stock has become notorious for taking wild rides after its financial reports. Last quarter, shares plunged more than 20% when Stitch Fix posted a wider-than-expected loss and softened its annual outlook. Two quarters prior, shares rallied over 30% on the heels of the retailer beating analysts’ profit expectations.

The question is, “Which way the stock will run?”

The business is expected to lose money, after swinging to a 20-cent loss in the period ended Jan. 30. Stitch Fix is forecast to book a third-quarter adjusted loss of 27 cents a share and $510.6 million in revenue, a 37% increase compared with a year earlier, according to average estimates of analysts compiled by Refinitiv.

There could be good news — if supply chain headwinds ease and pent-up consumer demand boosts sales. Other apparel retailers have gotten lifts as the economy reopens and shoppers are looking to replenish their wardrobes.

Wall Street likely wants to get a better taste of the change that a looming management shake-up could bring to the business. The retailer announced in April that its founder and current chief executive, Katrina Lake, will step down and be replaced by president Elizabeth Spaulding on Aug. 1.

Here are three key observations investors should look for as Stitch Fix rolls out its earnings.