Amazon Can’t Kill Stitch Fix

Amazon Can’t Kill Stitch Fix


This is a Guest Post by AK of Fallible

AK has been an analyst at long/short equity investment firms, global macro funds, and corporate economics departments. He co-founded Macro Ops and is the host of Fallible.


Stitch Fix (SFIX) is undervalued here. Our team is looking at potentially opening a position in the company. The video above will explain why.

SFIX is an online subscription clothing service that went public last December. It works by choosing a delivery frequency, a box a month or every 3 months, and you’ll be delivered a box with 5 items from shirts, to shoes, to pants. The person selecting what’s in the box is a stylist that uses data analytics that tracks your taste and combines it with popular trends. SFIX is partnered with popular brands like Nike (NKE) along with department stores like Nordstrom (JWN).

The reason SFIX is undervalued is because of the Amazon (AMZN) threat. Amazon released their own clothing service called Amazon Wardrobe. But it’s very different from SFIX. You have to select the box of clothes yourself, it comes to your house, you try them on, and send back what you don’t want. Basically it’s easy returns.

But SFIX goal is different. They are focused on personal style. The stylist is very important. They aren’t going for fast and cheap like Amazon. They are going for style and fit. There is no competing against Amazon in cheap and fast and that’s why companies shouldn’t do it. But if a company is focused on a niche with different clientele, they can still be very successful.

SFIX grew revenue at 30% yoy last quarter. They are also already profitable doing over $12m in adjusted EBITDA.

To learn more, make sure you watch the video above!

And as always, stay Fallible out there investors!

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***All content, opinions, and commentary by Fallible is intended for general information and educational purposes only, NOT INVESTMENT ADVICE.