On Tuesday, Piper Sandler adjusted its outlook on Stitch Fix , Inc. (NASDAQ:SFIX), a personal styling company, by reducing its stock price target to $2.25 from the previous $3.00. The firm has kept its underweight rating on the stock. This change reflects the company's ongoing challenges, as highlighted by a significant revenue decline and lowered guidance for the fiscal year 2024.
Stitch Fix has been grappling with external pressures and internal issues, leading to an 18% drop in revenue. The company's management has revised its FY24 guidance downward due to persistent softness in the business. Although there has been some improvement in margins, the firm noted that there is a lack of clarity on how to halt the revenue downturn.
The number of net active clients for Stitch Fix continues to decrease on a sequential basis. This trend is particularly concerning for the company's subscription-like business model, as it complicates efforts to boost near-term revenue. Despite the focus on enhancing the onboarding process and user experience, the pressures facing the company are intensifying.
In a statement, Piper Sandler expressed its stance, saying, "Management seems to be focused on the right things to improve onboarding and user experience, but given the intensifying pressure, we remain Underweight." This sentiment underscores the challenges ahead for Stitch Fix as it strives to navigate through a tough business environment.
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