Stitch Fix (NASDAQ:SFIX) reported third-quarter fiscal 2026 revenue and adjusted EBITDA above its outlook, as the online personal styling company pointed to stronger Fix order values, improving client trends and continued expense discipline as drivers of its latest results.
Chief Executive Officer Matt Baer said revenue rose 4.7% year over year to $340.3 million, marking the company’s fifth consecutive quarter of year-over-year revenue growth. Active clients totaled 2.3 million and increased by 21,000 sequentially, which Baer described as “a significant milestone” in the company’s transformation. Revenue per active client, or RPAC, reached $578, the highest level the company has reported and slightly above the record set in the prior quarter.
Fix Channel Drives Revenue Outperformance
Baer said the company’s revenue outperformance in the quarter was driven by strength in its Fix channel. Fix average order value rose year over year for the 11th consecutive quarter, primarily due to higher items per Fix as more clients adopted larger Fix offerings. Growth in average unit retail also contributed to the increase, reflecting assortment improvements.
In response to an analyst question, Baer said clients have been able to select Fixes with six, seven or eight items, helping Stitch Fix capture additional wallet share and provide more head-to-toe outfitting. He said the average order value of larger Fixes is “nearly double” that of a traditional Fix.
Chief Financial Officer David Aufderhaar said Fix average order value grew 6.4% in the quarter, better than expected, and was the primary reason revenue exceeded the company’s outlook.
Both the women’s and men’s businesses posted top-line gains in the quarter. Baer said women’s activewear and athleisure grew a combined 50% year over year, while sandals, skirts and sneakers performed well during the seasonal transition. In men’s, revenue grew double digits year over year for the fourth consecutive quarter, with shorts, short-sleeve woven tops and casual shoes each growing more than 30%.
Assortment Expansion Remains a Focus
Baer said Stitch Fix has worked over several years to improve the breadth and depth of its assortment by optimizing market brands, investing in private brands and expanding into new categories. He said some of the strongest growth in the quarter came from private brands including Montgomery Post, 41 Hawthorn, Market & Spruce and Alesbury, along with market brands such as TravisMathew, Vuori and Bonobos.
The company is also expanding in activewear, athleisure, footwear and accessories. Baer said Stitch Fix recently launched women’s sunglasses with brands including Le Specs, Current Air and KEEP Boutique, and strengthened footwear with new brands such as Frye while seeing growth in Adidas and New Balance. The company also added Outdoor Voices, Malbon Golf, Spiritual Gangster and Cotopaxi, while expanding with brands such as Varley, Rhone and its private label WeWander.
Baer reiterated the company’s view that achieving what it considers its fair share with existing clients in activewear and athleisure, footwear and accessories could unlock approximately $1 billion in incremental revenue.
Client Trends Improve, With Fiscal 2027 Growth Goal
Stitch Fix said active client trends continued to improve, with the year-over-year growth rate improving for the eighth consecutive quarter. New clients grew for the third consecutive quarter, rising more than 10% year over year. Baer said new client lifetime values increased year over year for the 11th consecutive quarter and were nearly double where they were three years ago.
The company also said retention rates improved for the seventh consecutive quarter, with the third quarter surpassing the prior quarter as the highest retention rate in four years. Total active clients on recurring shipments continued to grow year over year, and new clients on recurring shipments grew faster.
Aufderhaar said Stitch Fix still expects to return to year-over-year active client growth in fiscal 2027. However, he said the company expects active clients to decline slightly sequentially in the fourth quarter, by roughly 0.5% to 1%, because the period is typically less strong seasonally for client acquisition.
Baer also highlighted family accounts as an organic acquisition channel, saying the feature has made a material impact on the improvement in active client count. He said Stitch Fix is using household accounts to capture additional wallet share across families.
Profitability, Cash Flow and Buybacks
Gross margin was 43.7% in the third quarter, while contribution margin remained above 30% for the ninth consecutive quarter. Adjusted EBITDA was $13.2 million, representing a 3.9% margin. Aufderhaar said adjusted EBITDA exceeded guidance because of stronger-than-expected revenue and disciplined expense management.
The company ended the quarter with $229.4 million in cash and investments and no debt. Free cash flow was $6.5 million. Stitch Fix repurchased 4.5 million shares for $15.1 million during the quarter under its previously authorized share repurchase program, leaving $104.9 million remaining in the program.
Inventory ended the quarter at $132.2 million, up 15.6% year over year. Aufderhaar said the increase reflected investments in the client experience and higher demand for larger Fixes.
In a discussion of expenses, Aufderhaar said selling, general and administrative spending in the third quarter was down more than 220 basis points from last year and more than 800 basis points from two years ago. He said the company remains focused on driving leverage across the profit and loss statement while investing appropriately for growth.
Guidance Raised for Fiscal 2026
For the fourth quarter, Stitch Fix expects revenue of $322 million to $327 million and adjusted EBITDA of $7 million to $10 million. For the full fiscal year 2026, the company raised the midpoints and tightened its ranges for revenue and adjusted EBITDA. It now expects full-year revenue of $1.346 billion to $1.351 billion and adjusted EBITDA of $49 million to $52 million.
The company continues to expect to be free cash flow positive for the year, with full-year gross margin between 43% and 44% and advertising costs between 9% and 10% of revenue.
Baer said Stitch Fix is seeing resilience among its existing clients despite a more challenged consumer environment. He said revenue growth was similar across the income cohorts the company tracks, which he attributed to Stitch Fix’s ability to personalize the experience across a broad range of price points.
The company also discussed ongoing artificial intelligence initiatives. Baer said Stitch Fix Vision, the company’s AI-powered style visualization platform, continues to show more than a 100% lift in Freestyle spend over a 90-day period for clients who used it. He said Stitch Fix is also applying AI to inventory management, pricing, marketing execution and private brand product development.
“We’re growing our revenue. We’re improving our active client trends. We’re gaining market share, and we’re doing all of this while maintaining the financial discipline that has been central to the transformation,” Baer said in closing remarks.
About Stitch Fix (NASDAQ:SFIX)
Stitch Fix, Inc, headquartered in San Francisco, California, is a leading online personal styling service that blends data science with human expertise to deliver curated clothing and accessory selections. Founded in 2011 by Katrina Lake, the company pioneered a subscription-based model in which customers receive periodic “Fixes” tailored to their personal style, size and budget. Each shipment arrives with several handpicked items along with styling notes, allowing clients to review, purchase and return pieces at their convenience.
Clients begin by completing an online style profile that captures their measurements, design preferences and lifestyle needs.
