As we steep into Q4, Stitch Fix has officially announced its intent to go public. The curated clothing delivery company, which has raised $54.5 million from investors, is one of the most hotly anticipated IPOs in 2017.
Here’s Axios with the numbers we need to know:
The San Francisco-based company’s S-1 filing lists a net loss of just under $1 million on $977 million in revenue for the year ending July 29, 2017. It also reports having been profitable in both fiscal 2015 and fiscal 2016 on revenue of $342 million and $730 million, respectively. These are particularly strong numbers for a venture-backed e-commerce company coming to market, particularly with a subscription model.
Although these numbers are very positive for the company, there are still concerns. Overall, Stitch Fix has experienced a slowing in revenue growth. From 2016 to 2017, the companies revenue only grew 33 percent compared to 113 percent from 2015 to 2016. According to the company’s S-1, Stitch Fix intends to increase its marketing spend, implying that organic growth may have peaked:
Recently, we increased our paid marketing initiatives and intend to continue to do so. Our marketing efforts currently include client referrals, affiliate programs, partnerships, display advertising, television, print, radio, video, content, direct mail, social media, email, mobile “push” communications, search engine optimization and keyword search campaigns. We have limited experience marketing our services using some of these methods. Our marketing initiatives may become increasingly expensive and generating a meaningful return on those initiatives may be difficult. Even if we successfully increase revenue as a result of our paid marketing efforts, it may not offset the additional marketing expenses we incur.
Overall though, the apparel company looks to be heading towards a successful IPO, assuming it can maintain its perception as a tech company rather than a run of the mill apparel company.
And for startups currently operating in the apparel space, a successful Stitch Fix IPO could help buoy current valuations and increase investor appetite. Deal and round count in the sector have hit historic lows in 2017. We’ll find out of Stitch Fix can do more than improve one’s personal wardrobe.
From the Crunchbase Daily:
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