Stitch Fix ((SFIX)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Stitch Fix’s latest earnings call painted a generally positive picture, highlighting strong revenue growth, market share gains, and innovative AI applications. Despite facing challenges such as a decline in active clients and increased transportation costs, the overall sentiment was optimistic, reflecting the company’s strategic advancements and financial resilience.
Strong Revenue Growth
Stitch Fix reported a 4.4% adjusted revenue growth for the fourth quarter, reaching $311.2 million. This marks the second consecutive quarter of revenue growth and exceeds the company’s guidance, showcasing a robust financial performance.
Market Share Gains
The company successfully gained market share in the U.S. apparel market, as evidenced by Circana data. This growth was driven by enhancements in client experience and a more diverse product assortment, positioning Stitch Fix as a competitive player in the industry.
Growth in Average Order Value
Average order value (AOV) saw a significant 12% increase year-over-year, marking the eighth consecutive quarter of AOV growth. This was fueled by a higher number of items per Fix and a 7.6% rise in average unit retail (AUR).
Expansion in Men’s and Women’s Lines
Both the women’s and men’s lines experienced accelerated revenue growth in Q4. This was driven by the company’s expansion into non-apparel categories and the inclusion of established brands, broadening their market appeal.
Positive Adjusted EBITDA
Stitch Fix reported an adjusted EBITDA of $8.7 million for Q4, or 2.8% of revenue, surpassing guidance. This contributed to a full-year adjusted EBITDA of $49.1 million, reflecting a 170 basis point improvement compared to the previous fiscal year.
Introduction of AI Innovations
The company is leveraging generative AI to enhance personalization, with the introduction of an AI style assistant and a style visualization feature called Vision. These innovations aim to improve customer engagement and satisfaction.
Cost Structure Improvements
Stitch Fix successfully reduced its overall SG&A expenses by $124 million in FY ’25, achieving the highest full-year contribution margin in the last decade. This reflects the company’s commitment to operational efficiency.
Decline in Active Clients
Despite the positive financial metrics, active clients decreased by 7.9% year-over-year and 1.9% quarter-over-quarter. The company attributed these sequential net losses to seasonal factors.
Impact of Higher Transportation Costs
The gross margin for Q4 decreased by 100 basis points year-over-year, primarily due to higher transportation costs and a shift towards non-apparel categories. This highlights the external cost pressures faced by the company.
Forward-Looking Guidance
Looking ahead, Stitch Fix anticipates continued revenue growth in FY 2026, with improvements in active client growth rates expected throughout the year. The company plans to maintain a disciplined approach to growth investments, aiming to sustain its positive financial trajectory.
In summary, Stitch Fix’s earnings call conveyed a positive outlook, underscored by strong revenue growth and strategic advancements in AI and market share. While challenges such as declining active clients and rising transportation costs persist, the company’s forward-looking guidance suggests a commitment to sustained growth and operational efficiency.