Stitch Fix (SFIX) Q1 2025 earnings summary

Executive summary

• Q1 FY25 net revenue was $318.8 million, down 12.6% year-over-year, with a net loss of $6.3 million, reflecting improved cost management and a 570 basis point comp improvement from Q4 (adjusted for the 53rd week).

• Adjusted EBITDA reached $13.5 million, up from $8.6 million in the prior year, with a contribution margin of approximately 34%.

• Active clients declined 18.6% year-over-year to 2,434,000, but net revenue per active client rose 4.9% to $531.

• Transformation strategy focused on inventory freshness, personalized marketing, and operational efficiencies is driving improved results.

• Restructuring actions continued, with $1.0 million in additional charges and UK operations ceased, now reported as discontinued operations.

Financial highlights

• Net revenue declined 13% year-over-year but was flat sequentially; gross margin improved to 45.4%, up 180 basis points year-over-year.

• Adjusted EBITDA was $13.5 million, free cash flow was $9.9 million, and quarter ended with $253 million in cash and no debt.

• SG&A expenses decreased by $34 million, or 18.1%, year-over-year, reflecting lower compensation and facilities costs.

• Net inventory was $119.1 million, down 26% year-over-year, up 22% quarter-over-quarter due to seasonal receipts.

• Net loss from continuing operations improved to $6.3 million from $26.2 million in the prior year quarter.

Outlook and guidance

• FY25 revenue expected between $1.14 billion and $1.18 billion; adjusted EBITDA between $25 million and $36 million.

• Q2 revenue guidance is $290 million to $300 million; adjusted EBITDA $8 million to $13 million.

• Gross margin for Q2 and full year expected at 44%-45%; advertising to be at the high end of the 8%-9% range.

• Free cash flow positive for the full year, with Q2 expected to be negative due to inventory purchases.

• Management expects ongoing challenges in acquiring and retaining active clients to continue negatively affecting net revenue through fiscal 2025.