Stitch Fix delivered a quarter that outpaced Wall Street’s revenue expectations, with management attributing the performance to a combination of new client engagement features, expanded product assortment, and increasing use of generative AI. CEO Matt Baer emphasized that both women’s and men’s businesses saw accelerated growth, aided by strong seasonal demand and expanded offerings in categories like sneakers and outerwear. Management cited the success of new brands and innovative shopping experiences as key drivers. CFO David Aufderhaar highlighted improvements in average order value and repeated that disciplined operational execution is fueling sustainable growth.
Is now the time to buy SFIX? Find out in our full research report (it’s free for active Edge members).
Stitch Fix (SFIX) Q3 CY2025 Highlights:
- Revenue: $342.1 million vs analyst estimates of $337.2 million (7.3% year-on-year growth, 1.5% beat)
- Adjusted EPS: -$0.02 vs analyst estimates of -$0.04 ($0.02 beat)
- Adjusted EBITDA: $1.93 million vs analyst estimates of $10.1 million (0.6% margin, 80.9% miss)
- The company lifted its revenue guidance for the full year to $1.34 billion at the midpoint from $1.31 billion, a 2.3% increase
- EBITDA guidance for the full year is $43 million at the midpoint, above analyst estimates of $36.97 million
- Operating Margin: -2.5%, in line with the same quarter last year
- Active Clients: 2.31 million, down 127,000 year on year
- Market Capitalization: $727.4 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Stitch Fix’s Q3 Earnings Call
- Dylan Carden (William Blair) asked about metrics used to gauge new client stickiness. CEO Matt Baer emphasized nine consecutive quarters of improving lifetime value for new clients and highlighted a reduction in dormancy rates.
- Aneesha Sherman (Bernstein) inquired about market share gains and the impact of new gifting features. Baer noted Stitch Fix is gaining share from retailers that lack personalization and described family accounts as a key driver of holiday gifting engagement.
- David Bellinger (Mizuho) requested insights into early adoption of AI visualization tools. Baer reported that Stitch Fix Vision has exceeded initial expectations for client engagement and is driving organic sharing and acquisition.
- David Bellinger (Mizuho) also followed up on gross margin trends. CFO David Aufderhaar explained that higher transportation costs and category mix shifts, especially into lower-margin footwear, played major roles, while tariffs had a smaller impact.
- Jay Sole (UBS) questioned what makes the platform attractive to third-party brands and the drivers of revenue per active client. Baer detailed how the closed ecosystem benefits brands, and Aufderhaar cited higher order values and improved new client LTVs as drivers of revenue per client.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will monitor (1) the pace of active client recovery and the effectiveness of retention initiatives, (2) adoption and monetization of new AI-powered features such as Vision and the AI style assistant, and (3) continued progress in expanding the assortment and onboarding new brands. We will also track the impact of macroeconomic trends on discretionary consumer spending.
Stitch Fix currently trades at $5.39, up from $4.69 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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