Stitch Fix Q4 Earnings Call Highlights

Fiscal 2026 performance improved: Revenue rose 6.4% to $1.35 billion, while adjusted EBITDA margin reached 4% and free cash flow totaled $19.8 million.

Stitch Fix ended the year with $220.9 million in cash and no debt, and continued share repurchases.

Client spending increased despite fewer active users: Active clients declined 1.4% to 2.277 million, but revenue per client reached a record $592, supported by larger Fixes, broader assortments and strong growth in activewear, footwear and accessories.

Fiscal 2027 outlook reflects near-term pressure: Stitch Fix expects revenue of $1.31 billion to $1.36 billion and adjusted EBITDA of $27 million to $42 million, citing higher acquisition costs, cautious discretionary spending and temporary first-quarter issues.

The company plans to increase advertising and AI investments while targeting a return to active-client growth.

Stitch Fix NASDAQ: SFIX reported fiscal 2026 revenue growth and improved profitability, while executives said a more challenging consumer environment, higher client acquisition costs and temporary first-quarter issues are expected to weigh on fiscal 2027 results.

For fiscal 2026, revenue rose 6.4% to $1.35 billion.

Fourth-quarter revenue increased 4.2% year over year to $324.4 million, marking the company’s sixth consecutive quarter of positive revenue comparisons.

Chief Executive Officer Matt Baer said the company outperformed the broader U.S. apparel, footwear and accessories market, which he said was approximately flat during the quarter, citing Circana data.

Stitch Fix ended the fourth quarter with 2.277 million active clients, down 1.4% both year over year and sequentially.

However, revenue per active client reached a record $592, up 7.8% from a year earlier, while average order value increased 4.9%.

Chief Financial Officer David Aufderhaar said the company maintained contribution margins above 30% in every quarter of fiscal 2026 and expanded adjusted EBITDA margin to 4% for the full year.

Gross margin was 43.7%, within Stitch Fix’s target range of 43% to 44%.

Stitch Fix reported a fiscal-year net loss of $12.6 million, or $0.09 per share, narrowing from the prior year.

Free cash flow totaled $19.8 million, and the company finished the year with $220.9 million in cash equivalents and investments and no debt.

Fourth-quarter adjusted EBITDA was $10.8 million, representing a 3.3% margin and exceeding the company’s guidance, primarily because of lower fixed operating expenses.

Fourth-quarter gross margin was 43.6%, flat from a year earlier, as inventory management offset higher transportation costs and investments in new merchandise categories.

The company also continued repurchasing stock.

Stitch Fix bought back 2.7 million shares for $11.3 million in the fourth quarter and 7.2 million shares for $26.4 million during the full year.

It had $93.6 million remaining under its repurchase authorization.

Baer attributed revenue-per-client growth to larger Fix shipments, a broader assortment and expansion into categories where Stitch Fix had historically been underrepresented.

The company has recorded eight consecutive quarters of growth in both items per Fix and average unit retail, he said.

Activewear and athleisure sales across women’s and men’s offerings grew 21% year over year in the fourth quarter, while footwear grew 14%.

Accessories also outperformed the company’s overall revenue growth rate, according to Baer.

Stitch Fix added more...