Connect with us

BenzingaEditorial

Stitch Fix’s Blend of Two Sources of Intelligence Is a Gem

Published

on

Euromonitor International expects nearly half of U.S. apparel spending to shift online by 2025. To capture this tremendous opportunity, Stitch Fix (NASDAQ:SFIX) is ramping up investment. Although its recent earnings report was disappointing, the market committed the classic mistake of losing the forest for the trees.

The revenue miss was caused by shipment delays which is a short-term headwind.

Revenue of$504 million is still an increase of 11.6% YoY.

The delay in launching new product features means there is more growth to come.

The direct buy service has been resonating with existing clients. Instead of introducing it to new clients this year, management will launch these features toward the end of the fiscal fourth quarter, which will only shiftanticipated revenue growth to fiscal 2022. Expanding the addressable market and boosting revenue growth is still in the cards, just next year.

The number of new clients doesn’t lie.

While carrier delays could continue to negatively impact revenue growth, the number of active clients is increasing and it reflects the real momentum happening in the business. After bottoming out with the economic shutdown, active client growth has started to accelerate back to double-digit rates, amounting to 12% in the last quarter. Growth in first-time fix shipments from new clients accelerated to nearly 50% YoY in fiscal Q2, almost doubling from the previous quarter.

The business model- a blend of two sources of intelligence

Stitch Fix is an online personal styling service that uses AI algorithms and human stylists working in combination to make recommendations to clients of items of clothing, shoes, or accessories. The goal of this blend of art and science is to provide clients with a “Fix” in the form of personalized clothes choices that fit their style, size, and price range. There are now 5000 stylists across the U.S. and almost 150 data scientists with Stitch Fix being perhaps the first company to have a Chief Algorithms Officer. Machine learning models perform a variety of tasks by keeping styling, marketing, supply chain, customer service connected, along with handling other aspects of the company’s operations.  The styling algorithms collect and use as much data as possible, with all client responses and particularly rejections being incorporated. Algorithms are great at taking all the data into account and at helping stylists know how are they doing in keeping clients happy.

The human touch

Styling involves both information data and human judgement. Stylists have the final say as notes and preferences like “I’m just about to start a new job and need to dress to impress” are so nuanced that algorithms cannot adequately address them. But the stylist is able to truly understand the importance of these contextual comments which is why humans cannot be entirely replaced by AI. People are great at taking the context into account, making subjective judgments and interacting with clients in a personal way that technology cannot.

The perks of technology

Algorithms help to remove personal style biases so that stylists don’t get distracted by the item that matches their own personal taste, and instead focus on the items that are right for the client. They enable personalization at scale and also improve over time, all of which boosts efficiency

The hidden gem

Management’s discussion of moving to a vendor-managed inventory model, which is used by some of the largest retail companies to operate their world-class supply chains, could help Stitch Fix capture more market share and strengthen its profitability.

Accelerated growth

Stitch Fix has relied on selling merchandise through a wholesale model, but this has limited its assortment, causing customers to look elsewhere. A vendor-managed system basically puts inventory management on autopilot, resulting in a faster supply chain and better availability for in-demand items, helping the company have the right product at the right time. It will help the company tackle the growing online apparel market that is now worth $127 billion. Moving to a multi-inventory model will enable the company over time to meaningfully expand selection and attract more clients – driving higher demand and accelerating growth.

Improve profit margins

Effective inventory management is vital to protecting margins in a competitive retail industry, but it involves delicate balancing. Too much inventory can result in discounted merchandise and therefore harm profitability whereas no inventory equates to lost customers. A vendor-managed model is particularly powerful for a tech business whose entire strategy relies on collecting data from customers about their preferences to deliver a personalized shopping experience. Applying its data-driven algorithms to an automated inventory system should prove to be a very effective combination.

Laying the groundwork for more growth

Despite a weak quarter with revenue and adjusted revenue falling short of expectations due to COVID-related disruptions, the shift in the company’s inventory strategy is a positive sign for the future. Stitch Fix’s revenues in FY20 were $1.7 billion, and it had 3.5 million active clients made of U.S. and U.K. customers, and it is getting ready to broaden selection and fasten restock times to attract even more. Stitch Fix is one of the more interesting and faster-growing retailers of the last decade. The ‘sweatpandemic’ that no one saw coming knocked it a bit of its game, that’s all.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

IAM Newswire
Latest posts by IAM Newswire (see all)
Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

BenzingaEditorial

Coca Cola Made a Sparkling Recovery

Published

on

Coca-Cola’s (NYSE: KO) business was hit extra hard during the COVID-19 pandemic as people avoided gatherings with events being cancelled across the globe. As its business model is heavily reliant on these point-of-sale drinks, the pandemic translated into sharp volume drops for fiscal 2020 while peers like PepsiCo (NASDAQ: PEP) enjoyed booming demand at supermarkets and warehouse retailers. However, on Monday, the beverage giant showed it rebounded by beating on earnings with demand in March hitting pre-pandemic levels.

Fiscal first-quarter

Net sales rose 5% as they amounted to $9.02 billion, exceeding estimates of $8.6 billion. Organic revenues grew 6%, but unit case volume was flat compared to a year earlier. Demand improved every month of the quarter, driven by markets like China where uncertainty concerns around the virus eased.

Coca Cola reported a net income of $2.25 billion, or 52 cents per share. This is a drop compared to last year’s $2.78 billion, or 64 cents per share. Excluding items, earnings amounted to 55 cents per share, exceeding the 50 cents per share expected by analysts surveyed by Refinitiv.

Coca Cola has done a great job focusing on what it can control

Through the pandemic, executives slashed costs by finding ways to cut supply chain, marketing, production and packaging expenses, leading to rising profitability even as peer PepsiCo’s margins fell.

At the beginning of the year, management said the first quarter would be the hardest of the year, but that the scale of the recovery that follows would depend on big variables like the pace of vaccine distribution.

Unchanged demand

Quarterly demand was unchanged from a year earlier as North America and Western Europe take longer to recover from the pandemic but global unit case volume in March returned to 2019 levels.

While the central North American business is still under pressure, growth in India, China and Latin America managed to offset those declines. Nutrition, juice, dairy and plant-based beverage segment experienced a 3% volume growth as it was fueled by higher demand in China and India. Hydration, sports, coffee and tea segment was the hardest hit with volumes shrinking 11%. The coffee business declined 21% as Costa cafeswere heavily impacted by the lockdowns. The hydration category that includes Dasani and Smartwater reported volume declines of 12% as consumers across the globe bought less single-use water bottles. Demand for tea products fell 6%, whereas sports drinks saw volume decline slightly by 1%.

Uncertainty still remains

Back in February, management stated that the giant has positioning itself to come out of the crisis targeting faster growth and higher margins compared to its pre-pandemic figures.

The company restated its full-year forecast, with organic revenue growth expected in high single digits and adjusted earnings growth expected in the range between high single digits to low double digits. India and parts of Europe are reintroducing lockdowns due to spikes in new Covid-19 cases, while Latin America and Africa are expecting slower vaccine distribution and embracing for new waves. While vaccinations are rising in many countries such as the U.S., U.K., the flip side is there’s actually a new high in terms of cases as the weekly number of new cases has just hit an all-time peak.

Although April has started well for Coke, the looming risk of new lockdowns threatens to reverse that progress.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

IAM Newswire
Latest posts by IAM Newswire (see all)
Continue Reading

BenzingaEditorial

Global EV Updates

Published

on

The EV race is on as the 19th annual Shanghai Auto Show delivered a ton of new electric and tech-centric models this week. Chinese, European and U.S. automakers showed off their latest offerings in every price segment, showing us that an all-electric future is closer than ever.

New models revealed at the Shanghai Auto Show

Volkswagen Group (OTC: VWAGY)-owned Audi shared the spotlight with its Chinese partner companies FAW and SAIC, showing four world premieres: the Audi A6 e-tron concept vehicle, an updated Audi Q5L, the Audi A7L and an SUV study named Audi concept Shanghai which is still under wraps.

Volkswagen used the opportunity to reveal its third EV in its ID line, the VW ID.6, which is designed specifically for the Chinese market.

Xpeng Inc (NYSE: XPEV) revealed its third vehicle.

Warren Buffet-backed BYD is seeing sales increasing steadily on the “Han” the luxury electric sedan series that launched last year. The line has been named after China’s Han dynasty and this flagship series consists of three electric vehicles and one hybrid.

Geely Holdings Inc.(OTC: GELYF) took up a lot of the Shanghai Auto Show floor with several of its brands, including a brand new one. The Chinese automotive conglomerate’s brands Polestar, Volvo Cars, Lynk & Co, Geometry and the new Zeekr all brought their EVs to the show.

Daimler AG (OTC: DDAFI)-owned Mercedes showed its growing EQ brand, with the EQB, the compact mass-market all-electric SUV and EQS, the first all-electric luxury sedan which will be the first model introduced to the US.

Nio Inc (NYSE: NIO) officially debuted its flagship sedan, expected to begin production of the ET7 in the coming months, with a launch scheduled for Q1 2022.

SAIC-GM-Wuling Automobile Co., which is a joint venture between SAIC Motor Corp., General Motors (NYSE: GM) and Liuzhou Wuling Motors Co., revealed their latest vehicle which is the budget-friendly Hong Guang Mini EV that comes with a price tag as low as $5,000.

Toyota Motors (NYSE: TM) finally revealed its EV strategy, announcing to introduce 15 all-electric vehicles, including seven Toyota bZ branded models, by 2025.

The world’s first electric pickup will debut in the US

Although the Chinese government created a robust and competitive market, with over 400 automakers producing EVs for drivers around the world due to subsidies and investment in charging infrastructure, the world’s first electric pickup is coming this year and the US upstart Rivian could even beat Tesla Inc (NASDAQ: TSLA) in being the first to launch. Atlis Motor Vehicles and Hercules Electric Vehicles are also preparing their electric pickups who will be configured with TerraVis solar powered technology by Worksport Ltd (OTC: WKSP) who just announced plans to list on the NASDAQ. The developer and manufacturer of high quality, innovative and attractively priced tonneau covers, as well as of revolutionary solar-powered system TerraVis™  for light-duty trucks, has laid a solid foundation with its robust product line. It also finished the design of  TerraVis COR™ mobile battery system, an extension to the TerraVis solar fusion that offers a remote source of power to a wider consumer market.

The US still has a long way ahead

The Biden Administration is determined to make America the global leader in EV production with $2.65 trillion infrastructure plan that allocates $174 billion for developing its EV industry by installing 500,000 publicly accessible charging ports, introducing point-of-sale rebates for consumers and electrifying the federal fleet which consists of 650,000 vehicles. The US has a long way to go to clean up transportation’s dirty transportation, but the infrastructure plan sends a clear message that electric vehicles are a federal policy priority. Although the US automotive industry is positioned to emerge from an emissions-choked past into a battery-powered future, it has a lot of catching up to do as the whole world is very much in the EV race.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

IAM Newswire
Latest posts by IAM Newswire (see all)
Continue Reading

BenzingaEditorial

Toyota Finally Reveals Its EV Strategy

Published

on

At the Shanghai Motor show, Toyota Motors (NYSE: TM) has finally announced an electric vehicle strategy that will result in 15 new battery-electric vehicles released by 2025, along with revealing the 2023 Subaru all-electric SUV.

The electric SUV concept

The Japanese giant revealed the BZ4X that will serve as a starting point for future models with the BZ branding which stands for “Beyond Zero”. Toyota did not reveal any details or specifications for the vehicle, but it did announce it should be released in China and Japan later this year. The all-electric SUV will be built on Toyota’s new e-TNGA dedicated EV platform it developed with Subaru while using its all-wheel-drive technology. Toyota owns a small stake in its fellow Japanese automaker. Though it’s just a concept, the BZ4X seems to be near completion.

A new era

Toyota said it would release 70 electrified models by 2025, including battery-electric, hydrogen fuel cell, and gas-electric hybrids, for a range of “diverse choices”. fellow Japanese automaker Subaru.

Automakers like Nissan (OTC: NSANY), General Motors (NYSE: GM), Ford Motors (NYSE: F) and Volkswagen (OTC: VWAGY) that are already selling pure battery-electric vehicles also revealed its newest electric additions. We’ll know more about how serious Toyota is in embracing electric vehicles when it provides details about powertrain details and range, as well as the types of vehicles it will be making.

The home planet strategy

Besides finally taking off the covers off its first dedicated EV, Toyota announced its goal to become carbon neutral by 2050 as part of a new “home planet” strategy. Throughout its global business activities, Toyota will promote electrification strategies that contribute to reducing CO2 emissions throughout the entire lifecycle of a vehicle, while consulting with governments how to promote electrification.

Toyota is the latest global auto giant to announce ambitious EV plans to expand its product line-up and decarbonise its operations over the coming decades. The Japanese auto giant has been facing mounting criticism in recent years over its perceived failure to keep up with its peers on the EV front, as it instead sought to fortify its leadership position in the hybrid market. But, if history has taught us anything, it is that Toyota executives know very well what they are doing.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

IAM Newswire
Latest posts by IAM Newswire (see all)
Continue Reading
Advertisement

TRENDING

Advertisement

Submit an Article

Send us your details and the subject of your article and an IAM editor will be in touch with you shortly

Trending