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 A Diversified Growth Opportunity: Stitch Fix Inc. (SFIX)

Earlier this week, fashion retailer Stitch Fix Inc. (NASDAQ: SFIX) announced its third-quarter fiscal year 2021 earnings. Reports showed that the company had significantly improved its performance, which raised investors’ confidence.

Stitch Fix specializes in selling clothes tailored to a client’s tastes and characteristics. According to the company’s policy, it will send a set of clothes in the chosen style. Some customers can sign up for a subscription to receive goods on a particular schedule. Stitch Fix has no direct competitors because of this unusual business model.

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The revenue of Stitch Fix Inc. (NASDAQ: SFIX) grew by almost 45 % year over year to $535 million in the third quarter. Stitch Fix grew by 12 % compared to the second quarter. Approximately 20 % of its customers joined over the year, which is a significant growth factor. The Stitch Fix retailer has about 4.1 million customers at the moment. Despite this, revenue per customer for the past quarter decreased by 3 % on a YoY basis to $481. The reason for this may be due to last year’s problematic comparison when the demand for clothes sold over the Internet sharply grew against the backdrop of the pandemic.

Almost 50% of US customers have recently been able to sign up for Stitch Fix’s premium Fix Preview service, which is currently available to the entire UK. Clients can use this tool to browse items and discuss them with a stylist before choosing what items to buy. A new service was selected by 75% of subscribers, resulting in better results and higher-order values.

Its net profit also improved, with a loss per share of $0.18 in the last quarter compared with $0.33 in the same quarter the previous year. According to Stitch Fix, sales will grow by about 21% in the next few months, while the company raised its forecast for the rest of the year.

Stitch Fix Inc. (SFIX) shares rose 14.08% on the charts yesterday, trading at $66.10 at the last check. The Stitch Fix Inc. share price closed at $57.94 in the previous session. A total of 9.24 million shares were traded, which is higher than the average volume over the last three months of 2.36 million. It fluctuated between $62.50 and $69.20 during trading. The company had an earnings per share ratio of -0.90. In the past five sessions, the stock gained 23.90% of its value. The stock gained 59.16% within the past month, and year-to-date, it is up 13.57 %. Its 50-day moving average is $47.39 below its 200-day moving average of $50.08. Furthermore, the current RSI for the stock is 79.59.

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