0001628280-25-055606
SEC filingRevenue grew 7.3% YoY to $342.1M, but gross margin contracted 180 bps due to lower product margins and higher transportation costs, while net loss widened slightly.
For the three months ended November 1, 2025 (Q1 FY2026), Stitch Fix reported revenue of $342.1 million, a 7.3% increase year-over-year from $318.8 million. The growth was driven by a 5.3% rise in net revenue per active client, fueled by higher average order values and an increase in items kept per Fix, as well as higher average unit retail prices. However, active clients declined 5.2% to 2.31 million, reflecting ongoing challenges in client acquisition and retention.
Gross profit increased 3.1% to $149.3 million, but gross margin contracted 180 basis points to 43.6% from 45.4%. The margin compression was attributed to lower product margins and higher transportation costs, partially offset by improved inventory health resulting in lower write-downs and liquidations.
Selling, general, and administrative expenses (SG&A) rose $4.1 million to $157.9 million, driven by higher professional fees ($4.2 million in non-ordinary course legal fees) and increased advertising spend. However, as a percentage of revenue, SG&A improved to 46.2% from 48.2% due to lower compensation and benefits expenses, including reduced stock-based compensation.
Operating loss improved marginally to $8.6 million from $9.0 million, a 4.4% reduction. Net loss from continuing operations widened slightly to $6.4 million from $6.3 million, a 1.6% increase, due to lower interest income and higher other expenses.
Adjusted EBITDA remained nearly flat at $13.4 million, as lower stock-based compensation and restructuring costs offset the legal fees and higher depreciation.
Stitch Fix operates as a single reporting segment, serving clients across categories including Women’s, Men’s, Kids, Petite, Maternity, and Plus. While no segment-level financials are disclosed, management noted that shifts in merchandise mix—particularly toward Owned Private Label Brands, which carry higher margins—could influence gross margin over time. The company continues to invest in its data science and AI capabilities to enhance client experience and operational efficiencies.
Management expects continued macroeconomic uncertainty to pressure consumer discretionary spending in the remainder of fiscal 2026. However, they project that positive trends in average order values and items kept per Fix will offset the impact of declining active client counts on net revenue. Cost of goods sold is expected to rise due to investments in inventory assortment and higher transportation costs, while SG&A as a percentage of revenue is anticipated to decrease further as restructuring savings materialize. No specific numerical guidance was provided.
No balance sheet highlights are provided in the Notes section. Cash, investments, and equity are disclosed in the condensed financial statements but not restated in the Notes. The credit facility (Note 5) shows $50.0 million borrowing availability with $31.3 million excess availability and no outstanding borrowings.
Note 6 details litigation contingencies. The only material commitment is a $32.0 million securities class action settlement accrual (recorded in accrued liabilities), which is fully covered by insurance. No purchase commitments or other contractual obligations are disclosed.
No share repurchases, dividends, or debt issuance/repayment are mentioned. Capital expenditures are not disclosed in the Notes (only in the cash flow statement). The credit facility remains undrawn.
Note 11 confirms a single reportable segment. Geographic mix is not disclosed; all continuing operations are in the United States after the UK discontinued operations. Segment revenue for Q1 2026 was $342.1 million, up 7.3% from $318.8 million in the prior year. Key segment expenses include cost of goods sold ($192.8M), advertising ($33.9M), stock-based compensation ($11.5M), and depreciation ($6.3M). The segment reported a net loss from continuing operations of $6.4 million.
CFO of $10.9M exceeded net loss of $6.4M, driven by $11.5M stock-based compensation, $6.0M depreciation, and favorable working capital (accounts payable +$30.4M offset by inventory +$25.4M). Capex of $5.3M represents 48.9% of CFO, indicating modest reinvestment. The investing section is incomplete in the excerpt, and financing activities are not shown. No debt or equity transactions are visible. The primary cash outflow from investing is capex; securities purchases and sales net to an outflow but total not available. Overall, cash generation from operations remains positive but declined 23.5% YoY, highlighting lower operating efficiency and increased inventory investment.