Stitch Fix, Inc.

What they do

Stitch Fix clients complete an onboarding quiz and then engage either by receiving a 'Fix' — a curated box of items selected by a Stylist with algorithmic input — or by buying directly through the Freestyle e-commerce experience on its website and app. Clients keep what they want and return the rest in prepaid packaging. The company reports operations in the United States only, after ceasing its UK business in the first quarter of fiscal 2024, which is now reported as a discontinued operation.

Revenue drivers

• Fix (curated shipment) — The core model: algorithms recommend items, a Stitch Fix Stylist selects a box, and clients buy what they keep. The company has delivered over 100 million Fixes since inception; the filing does not break out Fix versus Freestyle revenue.
• Freestyle (direct purchase) — Clients buy directly from the website or app based on individualized outfit and item recommendations. The 10-K describes Freestyle as a primary engagement channel alongside Fix but gives no separate revenue figure.
• Merchandise assortment across categories — Revenue comes from apparel, shoes and accessories sold across Women's, Men's, Kids, Petite, Maternity and Plus, spanning multiple price points, sourced from third-party brand partners and Owned Private Label Brands. No category-level revenue is disclosed.
• Revenue per active client — Latest quarter net revenue per active client was $578, up 6.6% year-over-year, driven by higher average order values and more items kept per Fix, offsetting a smaller active client base.

Recent performance

For the third quarter of fiscal 2026 ended May 2, 2026, Stitch Fix reported net revenue of $340.3 million, up 4.7% year-over-year, and a net loss of $1.5 million, or $0.01 diluted loss per share. Adjusted EBITDA was $13.2 million (3.9% margin), with gross margin of 43.7%, down 50 basis points year-over-year. Active clients were 2.309 million, up 0.9% quarter-over-quarter but down 1.9% year-over-year; net revenue per active client rose 6.6% to $578. For the nine months ended May 2, 2026, revenue was $1,023.7 million, up 7.1% year-over-year, and cash, cash equivalents and investments totaled $229.4 million with no debt.

Strategy

Management is focused on retaining current clients, attracting new clients, improving conversion of new visitors to its site and app, and enhancing the overall client experience. The company continues to invest in its data set and proprietary algorithms across Stylist matching, Fix creation, merchandise buying, inventory placement, pricing and markdowns. It has been disciplined on costs, including the 2022 Restructuring Plan (with $1.2 million of additional charges in fiscal 2025 and no further cash charges expected) and continued evaluation of its real estate footprint. Capital returns include repurchasing 4.5 million Class A shares for $15.1 million in the latest quarter.

Risks

• Client retention and engagement — The company has previously been unable to retain clients or maintain engagement and spending, and continued failure could harm results.
• Growth depends on new client acquisition — The filing states growth depends on attracting new clients, and paid marketing may not be successful or cost-effective and can vary by period.
• Merchandise sourcing, tariffs and trade policy — Risks associated with sourcing and pricing of merchandise and raw materials, including tariffs and shifting trade policies, could adversely affect the business.
• Fulfillment, staffing and shipping — Operational constraints or failure to staff fulfillment centers, and changes or interruptions in shipping arrangements, could hurt client experience and operating results.

Outlook

For the fourth quarter of fiscal 2026 ending August 1, 2026, management guides net revenue of $322 million to $327 million (3.5% to 5.1% year-over-year growth) and Adjusted EBITDA of $7 million to $10 million (2.2% to 3.1% margin). For the full fiscal year 2026, guidance is net revenue of $1.346 billion to $1.351 billion (6.2% to 6.6% growth) and Adjusted EBITDA of $49 million to $52 million. The company expects full-year gross margin of 43% to 44%, advertising expense at 9% to 10% of revenue, and to be free cash flow positive for the year. Management continues to flag broader macroeconomic uncertainty and its potential negative impact on consumer discretionary spending.