Skip to content
    SFIX
    Earnings call· May 2026(Q3 FY26)

    Stitch Fix Q3 FY26 earnings call SFIX

    Jun 10, 2026 Source

    Executive summary

    Stitch Fix, Inc. Q3 FY26 — Sequential Active Client Growth and Strong Margins

    Stitch Fix achieved sequential active client growth and exceeded revenue and adjusted EBITDA outlooks, driven by an enhanced client experience and assortment improvements. While navigating a dynamic consumer environment, the company is focused on disciplined expense management and strategic investments to build a healthier client base and drive towards net income profitability. This performance reflects deliberate choices to strengthen the business foundation and deepen client engagement.

    Highlights

    5

    • Revenue grew 4.7% to $340.3 million, marking the fifth consecutive quarter of year-over-year growth.

    • Active clients increased by 21,000 sequentially to 2.3 million, a significant milestone in the company's transformation.

    • Revenue per active client (RPAC) reached $578, the highest level reported, up 6.6% year over year.

    • Adjusted EBITDA was $13.2 million, or 3.9% margin, exceeding the company's outlook.

    • New client LTVs increased year over year for the 11th consecutive quarter and were nearly double what they were three years ago.

    Concerns

    3

    • Q4 active clients are expected to be down slightly sequentially, between 0.5% to 1%, due to seasonal trends.

    • The company is observing an industry-wide increase in client acquisition costs from a marketing standpoint.

    • Management noted an increasingly challenged consumer environment and macroeconomic uncertainty.

    Guidance & targets

    8
    CategoryTargetConfidence
    Q4 FY26 Revenue
    $322 million and $327 million
    high materiality
    High
    Q4 FY26 Adjusted EBITDA
    $7 million and $10 million
    high materiality
    High
    Full-year FY26 Revenue
    $1.346 billion and $1.351 billion
    high materiality
    High
    Full-year FY26 Adjusted EBITDA
    $49 million and $52 million
    high materiality
    High
    Full-year FY26 Free Cash Flow
    positive
    medium materiality
    High
    Full-year FY26 Gross Margin
    between 43% to 44%
    medium materiality
    High
    Full-year FY26 Advertising Costs
    between 9% to 10% of revenue
    medium materiality
    High
    Active client growth
    return to year-over-year active client growth
    high materiality
    Medium

    Operational metrics

    11
    Revenue per active client (RPAC)
    $578up 6.6% year over year
    Q3 FY26

    marking the ninth consecutive quarter of year over year growth.

    Fixed average order value (AOV)
    6.4%year over year
    Q3 FY26

    increased year over year for the 11th straight quarter

    Contribution margin
    above 30%
    Q3 FY26

    for the ninth consecutive quarter

    Advertising as % of revenue
    10.2%
    Q3 FY26

    in line with our expectations

    Share repurchase program remaining authorization
    $104.9 million
    Q3 FY26 end

    after repurchasing 4.5 million shares for $15.1 million during the quarter

    Stock-based compensation expense as % of revenue
    3.3%down 100 basis points
    Q3 FY26

    part of the total SG&A spend

    Women's activewear and athleisure growth
    50%year over year
    Q3 FY26

    grew a combined 50% year over year

    Men's business growth
    double digitsyear over year
    Q3 FY26

    for the fourth straight quarter

    New client LTV increase
    nearly doublewhat they were three years ago
    Q3 FY26

    increased year over year for the 11th consecutive quarter

    Private brand gross margin premium
    500 basis points
    Q3 FY26

    higher gross margin than the market brands

    Activewear, athleisure, footwear, accessories growth
    north of 18%
    Q3 FY26

    all 3 of those growing outsize relative to our total business

    Industry KPIs

    3
    MetricValueDetails
    Sg a OPEX ratiodown over 220 basis pointsbps
    Gross margin drivers43.7%%
    Inventory position markdown risk$132.2 millionUSD

    Product announcements

    5
    ProductTypeDetails
    Women's sunglasseslaunch
    Footwear assortmentupdate
    Activewear and athleisureexpansion
    Men's and kids' swimwearexpansion
    Stitch Fix Vision integrationupdate

    Risks & headwinds

    3
    Challenged consumer environment

    increasingly challenged consumer environment

    Mitigation: Our model is resilient, differentiated, and uniquely equipped to navigate macroeconomic uncertainty and a more dynamic consumer backdrop.

    Increased client acquisition costsQ4

    maybe seeing a little bit of an increase in client acquisition costs from a marketing standpoint. We're seeing that across the industry.

    Mitigation: Management is comfortable with current advertising spend levels given strong client acquisition and retention.

    Seasonal active client declineQ4

    expect Q4 to be down slightly sequentially, somewhere between about 0.5% to 1% down sequentially.

    Mitigation: Management expects year-over-year active client growth rate improvement to continue and aims for year-over-year growth in FY27.

    Q&A highlights

    8

    Asked for more detail on the drivers of average order value (AOV) growth, specifically strategies for increasing units per fix and other contributing factors.

    Matt Baer attributed AOV gains to the success of larger fix offerings (6-8 items), which nearly double the AOV of traditional fixes, and improved assortment quality in both market and private brands, leading to higher average unit retail (AURs). He noted private brands also offer 500 basis points higher gross margin.

    “As we've enabled our clients to have fixes, six, seven, or eight items, we've seen many clients self-select into those larger fixes, helping us capture additional wallet share, better provide head-to-toe outfitting...”

    asked by Jay Sole · answered by Matt Baer

    2 min read5 chapters

    Detailed Narrative

    01

    Client Base Transformation and Growth

    Stitch Fix achieved sequential active client growth for the first time in its transformation journey, reaching 2.3 million active clients. This was supported by new client growth exceeding 10% year over year for the third consecutive quarter and an 11th consecutive quarter of year-over-year LTV increases for new client cohorts, nearly doubling LTVs from three years ago. Retention rates also strengthened, reaching a four-year high, indicating a healthier and more durable client base.

    02

    Assortment Enhancement and Market Share Gains

    The company significantly enhanced its merchandise assortment, optimizing market brands and investing in private labels, leading to improved average unit retail (AUR). This strategy resulted in both women's and men's businesses seeing top-line gains, with activewear and athleisure growing 50% year over year. According to Circana data, Stitch Fix meaningfully outperformed the total U.S. apparel, footwear, and accessories market, growing more than four times the market rate.

    03

    AI-Driven Client Experience and Efficiency

    Stitch Fix continues to leverage AI, notably with Stitch Fix Vision, which provides personalized imagery and has shown over 100% lift in Freestyle spend for users. The company is integrating Vision further, enabling clients to generate their own style visualizations. AI is also applied internally for inventory management, intelligent pricing, creative marketing, and private brand product development, reducing design cycles from months to about one week.

    04

    Financial Discipline and Capital Allocation

    The company demonstrated strong financial discipline, achieving adjusted EBITDA of $13.2 million (3.9% margin) and generating $6.5 million in free cash flow in Q3. SG&A spend decreased by 220 basis points year over year. Stitch Fix repurchased 4.5 million shares for $15.1 million, with $104.9 million remaining in the program, reflecting confidence in its financial position and commitment to strategic capital allocation.

    05

    Strategic Category Expansion

    Stitch Fix is expanding its offerings in activewear, athleisure, footwear, and accessories, identifying a potential $1 billion incremental revenue opportunity within its existing client base. Recent additions include women's sunglasses brands like Le Specs, footwear brands like Frye, and activewear brands such as Outdoor Voices and Spiritual Gangster, alongside growth in established brands like Adidas and New Balance. These categories are growing north of 18% in the last quarter.

    AI-generated summary of the company’s earnings call. Not investment advice.