Stitch Fix: Revenue Soars, Clients Slide

Core Insights - Stitch Fix reported Q2 2025 earnings that exceeded analysts' expectations, with an EPS loss of $0.05 compared to an estimated loss of $0.11, and revenue of $312.1 million surpassing predictions of $298 million [2][7] - Despite these positive earnings, the company experienced a 15.5% year-over-year decline in active clients, indicating ongoing challenges in client engagement and retention [2][6] Financial Performance - The Q2 2025 EPS loss improved to ($0.05) from ($0.30) in Q2 2024, while revenue decreased by 5.5% from $330.4 million in the previous year [4][7] - Active clients fell to 2.37 million from 2.81 million year-over-year, but net revenue per active client increased by 4.3% to $537 [4][6] - Adjusted EBITDA reached $15.9 million, significantly above management's guidance of $8 million to $13 million, reflecting improved operational efficiencies [7][9] Operational Strategies - The company has focused on enhancing AI-driven personalization and stylistic recommendations, which has contributed to improved client monetization [5][8] - Gross margin improved by 110 basis points year-over-year to 44.5%, indicating better cost management and higher product margins [6][7] Future Outlook - Management projects Q3 2025 revenue between $311 million and $316 million, anticipating continued year-over-year declines, but has raised full-year revenue guidance to between $1.225 billion and $1.240 billion [9][10] - The adjusted EBITDA target for Q3 is set between $7 million and $10 million, emphasizing ongoing operational improvements [9][10]