SFIX Q4 Loss Narrower Than Expected, AI Investments Boost Engagement

Core Insights - Stitch Fix, Inc. (SFIX) reported fourth-quarter fiscal 2025 results with both top and bottom lines exceeding Zacks Consensus Estimates, although the top line showed a year-over-year decline while the bottom line improved [1][3]. Financial Performance - The company recorded an adjusted loss of 7 cents per share, better than the Zacks Consensus Estimate of a 13-cent loss and an improvement from a 12-cent loss in the previous year [3][11]. - Net revenues were $311.2 million, surpassing the Zacks Consensus Estimate of $301 million, but decreased by 2.6% compared to the same quarter last year [3][11]. - Active clients numbered 2,309,000, reflecting a year-over-year decline of 7.9%, while average net revenues per active client (RPAC) increased by 3% to $549, marking six consecutive quarters of growth in this metric [4][11]. Operational Metrics - Average order value (AOV) rose by 12% year over year, continuing an upward trend for eight consecutive quarters, driven by an increase in items per Fix and a 7.6% rise in average unit retail [5][11]. - Gross profit fell by 4.7% to $135.7 million, with a gross margin decrease of 100 basis points to 43.6%, primarily due to higher transportation costs and a shift towards non-apparel categories [6]. - Selling, general and administrative expenses (SG&A) decreased by 20.3% to $146.9 million, with SG&A as a percentage of net revenues dropping to 47.2% from 57.7% in the prior year [7]. Profitability and Cash Flow - Adjusted EBITDA was $8.7 million, down from $9.5 million in the previous year, with an adjusted EBITDA margin of 2.8%, reflecting ongoing cost management [9]. - The company ended the quarter with cash and cash equivalents of $114 million, short-term investments of $120.9 million, and no debt, indicating a solid liquidity position [12]. Future Guidance - For the first quarter of fiscal 2026, Stitch Fix anticipates net revenues between $333 million and $338 million, representing a year-over-year growth of 4.4-6% [13]. - Full-year fiscal 2026 revenue is expected to range from $1.28 billion to $1.33 billion, indicating a 1-5% increase over the prior year, with projected adjusted EBITDA of $30-$45 million [14]. Stock Performance - SFIX stock has increased by 69.2% over the past three months, significantly outperforming the industry growth of 11.4% [15].