Stitch Fix is on a growth trajectory -- here are 2 reasons why

Analysts say there are two key reasons why Stitch Fix Inc. is on a growth trajectory while others with similar business models may not be: its ongoing data collection efforts and the addition of new categories that take an increasing share of household spend.

“In an environment where many retailers face growth challenges, we remain confident in our ability to deliver personalization at scale, using our unique combination of human judgment and data science that continues delighting clients and growing our business,” said Katrina Lake, Stitch Fix’s chief executive and founder on the earnings call, according to a FactSet transcript.

“Stitch Fix is accelerating top-line due primarily to increased spend per member and for an e-commerce business that had question marks around their ability to sustain growth, this is likely to lead to further share price appreciation,” Wells Fargo wrote. “With margin deleverage remaining a concern, we think this will remain a highly debated stock.”

According to YouGov data cited in a May eMarketer report, between 80% and 85% of U.S. internet users have never signed up for a retail subscription service, which includes grocery and meal kits. Apparel wasn’t included in the report data.

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