Stitch Fix Inc

Previous wording

For the three and six months ended February 1, 2025, we reported $312.1 million and $630.9 million in net revenue, respectively, representing a year-over-year decrease of 5.5% and 9.2%, respectively, compared to the three and six months ended January 27, 2024. As of February 1, 2025, and January 27, 2024, we had approximately 2,371,000 and 2,805,000 active clients, respectively, representing a year-over-year decline of 15.5%.

Current wording

For the three and nine months ended May 3, 2025, we reported $325.0 million and $955.9 million in net revenue, respectively, representing a year-over-year increase of 0.7% and decrease of 6.1%, respectively, compared to the three and nine months ended April 27, 2024. As of May 3, 2025, and April 27, 2024, we had approximately 2,353,000 and 2,633,000 active clients, respectively, representing a year-over-year decline of 10.6%.

Previous wording

During the three and six months ended February 1, 2025, we experienced a decline in net revenue year-over-year primarily due to our challenges in acquiring and retaining active clients. We expect these challenges in acquiring and retaining active clients to continue having a negative compounding effect on net revenue throughout fiscal 2025. We remain focused on retaining current clients, improving the conversion of new clients, and enhancing our overall client experience for new and existing clients.

Current wording

Although we experienced an increase in net revenue year-over-year for the three months ended May 3, 2025, we experienced a decline in net revenue year-over-year for the nine months ended May 3, 2025, primarily due to our challenges in acquiring and retaining active clients. We expect these challenges in acquiring and retaining active clients to continue having a negative compounding effect on net revenue throughout fiscal 2025. We remain focused on retaining current clients, improving the conversion of new clients, and enhancing our overall client experience for new and existing clients. Refer to the section titled “Results of Operations—Key Financial and Operating Metrics” for information on how we define and calculate active clients.

Previous wording

Net loss from continuing operations for the three and six months ended February 1, 2025, was $6.6 million and $12.9 million, respectively, compared to a net loss from continuing operations of $35.0 million and $61.1 million for the three and six months ended January 27, 2024, respectively.

Current wording

Net loss from continuing operations for the three and nine months ended May 3, 2025, was $7.4 million and $20.3 million, respectively, compared to a net loss from continuing operations of $22.0 million and $83.1 million for the three and nine months ended April 27, 2024, respectively.

Previous wording

For more information on the components of net loss from continuing operations for the three and six months ended February 1, 2025, refer to the section titled “Results of Operations” below.

Current wording

For more information on the components of net loss from continuing operations for the three and nine months ended May 3, 2025, refer to the section titled “Results of Operations” below.

Previous wording

During the three and six months ended February 1, 2025, in furtherance of and as an expansion of the restructuring plan announced in June 2022 (the “2022 Restructuring Plan”), we recorded $0.2 million and $1.2 million of additional restructuring charges, respectively. As of February 1, 2025, we do not expect any additional cash restructuring charges related to the 2022 Restructuring Plan.

Current wording

During the six months ended February 1, 2025, in furtherance of and as an expansion of the restructuring plan announced in June 2022 (the “2022 Restructuring Plan”), we recorded $1.2 million of additional restructuring charges, respectively. No additional charges were recorded during the three months ended May 3, 2025, As of May 3, 2025, we do not expect any additional cash restructuring charges related to the 2022 Restructuring Plan.

Previous wording

(1) For the three and six months ended January 27, 2024, depreciation and amortization excluded $3.4 million and $7.6 million, respectively, reflected as restructuring charges within restructuring and other one-time costs.

Current wording

(1) For the three and nine months ended April 27, 2024, depreciation and amortization excluded $1.6 million and $9.2 million, respectively, reflected as restructuring charges within restructuring and other one-time costs.

Previous wording

(2) Restructuring and other one-time costs includes restructuring charges as described in Note 11, “Restructuring” in the Notes to the Condensed Consolidated Financial Statements in Part I, Item 1, and, for the three and six months ended February 1, 2025, also includes $0.4 million and $1.8 million, respectively, in one-time bonuses for certain continuing employees. For the three and six months ended January 27, 2024, other one-time costs were comprised of $3.6 million in one-time professional services fees.

Current wording

(2) Restructuring and other one-time costs includes restructuring charges as described in Note 11, “Restructuring” in the Notes to the Condensed Consolidated Financial Statements in Part I, Item 1, and, for the three and nine months ended May 3, 2025, also includes $0.1 million and $1.9 million, respectively, in one-time bonuses for certain continuing employees. For the nine months ended April 27, 2024, other one-time costs were comprised of $2.9 million in one-time professional services fees.

Previous wording

We define Free Cash Flow as cash flows used in operating activities from continuing operations, reduced by purchases of property and equipment that are included in cash flows from investing activities from continuing operations. The following table presents a reconciliation of net cash flows used in operating activities from continuing operations, the most comparable GAAP financial measure, to Free Cash Flow for each of the periods presented:

Current wording

We define Free Cash Flow as cash flows provided by operating activities from continuing operations, reduced by purchases of property and equipment that are included in cash flows from investing activities from continuing operations. The following table presents a reconciliation of net cash flows used in operating activities from continuing operations, the most comparable GAAP financial measure, to Free Cash Flow for each of the periods presented:

Previous wording

We believe that the number of active clients is a key indicator of the overall health of our business. We define an active client as a client who checked out a Fix or was shipped an item via Freestyle in the preceding 52 weeks, measured as of the last day of that period. Clients check out a Fix when they indicate what items they are keeping through our mobile application or on our website. We consider each Women’s, Men’s, or Kids account as a client, even if they share the same household. We had approximately 2,371,000 and 2,805,000 active clients as of February 1, 2025, and January 27, 2024, respectively, representing a year-over-year decrease of 15.5%. The decrease in active clients is due to dormant clients outpacing new client additions during the quarter, which we largely attribute to client conversion and retention challenges.

Current wording

We believe that the number of active clients is a key indicator of the overall health of our business. We define an active client as a client who checked out a Fix or was shipped an item via Freestyle in the preceding 52 weeks, measured as of the last day of that period. Clients check out a Fix when they indicate what items they are keeping through our mobile application or on our website. We consider each Women’s, Men’s, or Kids account as a client, even if they share the same household. We had approximately 2,353,000 and 2,633,000 active clients as of May 3, 2025, and April 27, 2024, respectively, representing a year-over-year decrease of 10.6%. The decrease in active clients is due to dormant clients outpacing new client additions during the year, which we largely attribute to client conversion and retention challenges.

Previous wording

We believe that net revenue per active client is an indicator of client engagement and satisfaction. We calculate net revenue per active client based on net revenue over the preceding four fiscal quarters divided by the number of active clients measured as of the last day of the period. Net revenue per active client was $537 and $515 as of February 1, 2025, and January 27, 2024, respectively, or a year-over-year increase of 4.3%.

Current wording

We believe that net revenue per active client is an indicator of client engagement and satisfaction. We calculate net revenue per active client based on net revenue over the preceding four fiscal quarters divided by the number of active clients measured as of the last day of the period. Net revenue per active client was $542 and $525 as of May 3, 2025, and April 27, 2024, respectively, or a year-over-year increase of 3.2%.

Previous wording

Our business and operating results are subject to national and global economic conditions and their impact on consumer discretionary spending. As the macroeconomic environment is experiencing inflation, recessionary concerns, and general uncertainty regarding the overall future political and economic environment, we cannot predict whether or when such circumstances may improve or worsen or what impact such circumstances could have on our business.

Current wording

Our business and operating results are subject to national and global economic conditions and their impact on consumer discretionary spending. As the macroeconomic environment is experiencing inflation, recessionary concerns, and general uncertainty regarding trade policies, including tariffs and other restrictions, and the overall future political and economic environment, we cannot predict whether or when such circumstances may improve or worsen. However, we anticipate that broader macroeconomic uncertainty and market conditions will put increased pressure on consumer discretionary spending in fiscal 2026, which may negatively impact our business.

Previous wording

We leverage our data science to buy and manage our inventory, including merchandise assortment and fulfillment center optimization. Because our merchandise assortment directly correlates to client success, we may at times optimize our inventory to prioritize long-term client success over short-term gross margin impact. To ensure sufficient availability of merchandise, we generally enter into purchase orders well in advance and frequently before apparel trends are confirmed by client purchases. As a result, we are vulnerable to demand and pricing shifts and availability of merchandise at the time of purchase. We incur inventory write-offs and changes in inventory reserves that impact our gross margins. Moreover, our inventory investments will fluctuate with the needs of our business.

Current wording

We leverage our data science to buy and manage our inventory, including merchandise assortment and fulfillment center optimization. Because our merchandise assortment directly correlates to client success, we may at times optimize our inventory to prioritize long-term client success over short-term gross margin impact. To ensure sufficient availability of merchandise, we generally enter into purchase orders well in advance and frequently before apparel trends are confirmed by client purchases. As a result, we are vulnerable to demand and pricing shifts, including due to tariffs, and availability of merchandise at the time of purchase. We incur inventory write-offs and changes in inventory reserves that impact our gross margins. Moreover, our inventory investments will fluctuate with the needs of our business.

Previous wording

Marketing expense is recorded in selling, general, and administrative expenses in the condensed consolidated statements of operations and comprehensive loss. The largest component of our marketing expense is advertising, which was $24.4 million and $54.4 million for the three and six months ended February 1, 2025, respectively, and $24.2 million and $53.9 million for the three and six months ended and January 27, 2024, respectively. We will continue to be methodical about our approach when we are making advertising decisions, and may adjust our spending up or down based on performance.

Current wording

Marketing expense is recorded in selling, general, and administrative expenses in the condensed consolidated statements of operations and comprehensive loss. The largest component of our marketing expense is advertising, which was $33.2 million and $87.7 million for the three and nine months ended May 3, 2025, respectively, and $28.6 million and $82.5 million for the three and nine months ended and April 27, 2024, respectively. We will continue to be methodical about our approach when we are making advertising decisions, and may adjust our spending up or down based on performance.

Previous wording

Cost of goods sold consists of the costs of merchandise, expenses for inbound freight and shipping to and from clients, inventory write-offs and changes in our inventory reserve, payment processing fees, and packaging materials costs, offset by the recoverable cost of merchandise estimated to be returned. We expect our cost of goods sold to fluctuate as a percentage of revenue primarily due to how we manage our inventory and merchandise mix. Our classification of cost of goods sold may vary from other companies in our industry and may not be comparable.

Current wording

Cost of goods sold consists of the costs of merchandise, expenses for inbound freight and shipping to and from clients, inventory write-offs and changes in our inventory reserve, payment processing fees, and packaging materials costs, offset by the recoverable cost of merchandise estimated to be returned. We expect our cost of goods sold to increase in fiscal 2026 if tariffs are sustained at heightened levels. We also expect fluctuations in our cost of goods sold as a percentage of revenue primarily due to how we manage our inventory and merchandise mix. Our classification of cost of goods sold may vary from other companies in our industry and may not be comparable.

Previous wording

Revenue decreased by $18.3 million and $64.3 million, or 5.5% and 9.2% during the three and six months ended February 1, 2025, respectively, compared to the three and six months ended January 27, 2024. The decrease was primarily due to a 15.5% decrease in active clients from January 27, 2024 to February 1, 2025, which led to a decrease in sales of merchandise. Partially offsetting the revenue decline during the three and six months ended February 1, 2025, was an improvement in net revenue per active client, which was driven by an increase in average order values.

Current wording

During the three months ended May 3, 2025, revenue increased by $2.3 million, or 0.7%, compared to the prior year period, primarily due to an improvement in net revenue per active client, which was driven by higher average order values. The increase during the period was partially offset by a decrease in active clients from April 27, 2024 to May 3, 2025. During the nine months ended May 3, 2025, revenue decreased by $62.0 million, or 6.1%, compared to the prior year period, primarily due to a 10.6% decrease in active clients from April 27, 2024 to May 3, 2025, which led to a decrease in sales of merchandise. Partially offsetting the revenue decline during the nine months ended May 3, 2025, was an improvement in net revenue per active client, which was driven by higher average order values.

Previous wording

Gross margin for the three and six months ended February 1, 2025, increased by 110 and 150 basis points, respectively, compared to the prior year period. The increase in gross margin for the three months ended February 1, 2025 was primarily driven by higher average order values and improved product margins. The increase in gross margin for the six months ended February 1, 2025 was primarily driven by higher average order values, improved product margins, and transportation leverage as our carrier mix yielded more favorable year-over-year rates.

Current wording

Gross margin for the three and nine months ended May 3, 2025, decreased by 130 and increased by 50 basis points, respectively, compared to the prior year period. The decrease in gross margin for the three months ended May 3, 2025 was primarily driven by lower product margins. The increase in gross margin for the nine months ended May 3, 2025 was primarily driven by higher average order values and transportation leverage as our carrier mix yielded more favorable year-over-year rates.

Previous wording

SG&A decreased by $33.6 million and $67.6 million for the three and six months ended February 1, 2025, respectively, compared to the three and six months ended January 27, 2024. The year-over-year decrease was primarily driven by lower compensation and benefits expense including lower stock-based compensation expense, lower depreciation and amortization expense, and lower facilities costs, largely driven by our restructuring actions, and due to one-time professional service fees incurred during the three and six months ended January 27, 2024.

Current wording

SG&A decreased by $18.6 million and $86.2 million for the three and nine months ended May 3, 2025, respectively, compared to the three and nine months ended April 27, 2024. The year-over-year decrease for both periods was primarily driven by lower compensation and benefits expense including lower stock-based compensation expense, lower depreciation and amortization expense, and lower facilities costs, largely driven by our restructuring actions, partially offset by higher advertising spend.

Previous wording

SG&A as a percentage of revenue decreased to 47.4% and 47.8% for the three and six months ended February 1, 2025, respectively, compared with 54.9% and 53.1% for the three and six months ended January 27, 2024, respectively. The decrease in SG&A as a percentage of revenue for the three and six months ended February 1, 2025, compared with the same period last year, was primarily driven by lower compensation and benefits expense including lower stock-based compensation expense, lower depreciation and amortization expense, and lower facilities costs, largely driven by our restructuring actions, as a percentage of revenue. This was partially offset by a year-over-year increase in advertising spend as a percentage of revenue for both the three and six months ended February 1, 2025.

Current wording

SG&A as a percentage of revenue decreased to 47.2% and 47.6% for the three and nine months ended May 3, 2025, respectively, compared with 53.2% for both the three and nine months ended April 27, 2024. The decrease for both periods was primarily driven by lower compensation and benefits expense including lower stock-based compensation expense, lower depreciation and amortization expense, and lower facilities costs, largely driven by our restructuring actions, as a percentage of revenue, partially offset by higher advertising spend as a percentage of revenue.

Previous wording

Our continuing operations are subject to income taxes in the United States. Our effective tax rate for the three and six months ended February 1, 2025, differs from the federal statutory income tax rate primarily due to the full valuation allowance recorded on our net federal and state deferred tax assets. The tax provision for the three and six months ended February 1, 2025, is primarily comprised of state taxes.

Current wording

Our continuing operations are subject to income taxes in the United States. Our effective tax rate for the three and nine months ended May 3, 2025, differs from the federal statutory income tax rate primarily due to the full valuation allowance recorded on our net federal and state deferred tax assets. The tax provision for the three and nine months ended May 3, 2025, is primarily comprised of state taxes.

Previous wording

Our effective tax rate for the three and six months ended January 27, 2024, differed from the federal statutory income tax rate primarily due to the full valuation allowance recorded on our net federal and state deferred tax assets. The tax provision for the three and six months ended January 27, 2024, is primarily comprised of state taxes.

Current wording

Our effective tax rate for the three and nine months ended April 27, 2024, differed from the federal statutory income tax rate primarily due to the full valuation allowance recorded on our net federal and state deferred tax assets. The tax provision for the three and nine months ended April 27, 2024, is primarily comprised of state taxes.

Previous wording

Our principal sources of liquidity are our cash, cash equivalents, investments, cash flows from continuing operations, and borrowing capacity under our credit facility. As of February 1, 2025, we had $113.2 million of cash and cash equivalents attributable to continuing operations, which included $0.2 million held outside the U.S. in the UK, and $116.6 million of investments. We plan to repatriate the remaining UK cash into the U.S. within 12 months of liquidating of the UK entity. This cash repatriation may be subject to taxes and other local statutory restrictions.

Current wording

Our principal sources of liquidity are our cash, cash equivalents, investments, cash flows from continuing operations, and borrowing capacity under our credit facility. As of May 3, 2025, we had $108.9 million of cash and cash equivalents attributable to continuing operations, and $133.2 million of investments. As of May 3, 2025, we had repatriated our remaining cash held outside of the U.S. in the UK.

Previous wording

In January 2022, our Board of Directors authorized a share repurchase program to repurchase up to $150.0 million of our outstanding Class A common stock, with no expiration date (the “2022 Repurchase Program”). We may repurchase shares from time to time through open market repurchases, privately negotiated transactions, or other means, including through Rule 10b5-1 trading plans. The actual timing, number and value of shares repurchased in the future will be determined by the Company in its discretion and will depend on a number of factors, including price, trading volume, market conditions, and other general business conditions. Repurchases will be funded from the Company’s existing cash and cash equivalents or future cash flow. The repurchase program may be modified, suspended, or terminated at any time. During the three and six months ended February 1, 2025, and January 27, 2024, the Company made no repurchases of Class A common stock. As of February 1, 2025, the Company had repurchased an aggregate 2,302,141 shares of Class A common stock for $30.0 million, and $120.0 million remained available under the 2022 Repurchase Program authorization.

Current wording

In January 2022, our Board of Directors authorized a share repurchase program to repurchase up to $150.0 million of our outstanding Class A common stock, with no expiration date (the “2022 Repurchase Program”). We may repurchase shares from time to time through open market repurchases, privately negotiated transactions, or other means, including through Rule 10b5-1 trading plans. The actual timing, number and value of shares repurchased in the future will be determined by the Company in its discretion and will depend on a number of factors, including price, trading volume, market conditions, and other general business conditions. Repurchases will be funded from the Company’s existing cash and cash equivalents or future cash flow.

Previous wording

During the six months ended February 1, 2025, cash used in operating activities from continuing operations was $1.9 million, which consisted of a net loss from continuing operations of $12.9 million, adjusted by non-cash charges of $45.5 million and a $34.6 million change in net operating assets and liabilities. The non-cash charges were primarily driven by $29.9 million of stock-based compensation expense; $13.5 million of depreciation, amortization, and accretion; and a $2.0 million change in inventory reserves. The change in net operating assets and liabilities was primarily due to a $14.2 million net decrease in accounts payable and accrued liabilities driven by the timing of payments and a $13.7 million increase in gross inventory balances due to higher inventory receipts.

Current wording

During the nine months ended May 3, 2025, cash provided by operating activities from continuing operations was $18.6 million, which consisted of a net loss from continuing operations of $20.3 million, adjusted by non-cash charges of $66.7 million and a $27.8 million change in net operating assets and liabilities. The non-cash charges were primarily driven by $43.7 million of stock-based compensation expense and $20.0 million of depreciation, amortization, and accretion. The change in net operating assets and liabilities was primarily due to a $19.5 million increase in gross inventory balances due to higher inventory receipts.

Previous wording

During the six months ended January 27, 2024, cash used in operating activities from continuing operations was $1.7 million, which consisted of a net loss from continuing operations of $61.1 million, adjusted by non-cash charges of $61.1 million and a $1.7 million change in net operating assets and liabilities. The non-cash charges were primarily driven by $41.0 million of stock-based compensation expense, and $26.6 million of depreciation and amortization. The change in our net operating assets and liabilities was primarily due to a net decrease of $14.1 million in accounts payable and accrued liabilities due to timing of payments. This is offset by a $9.7 million change in gross inventory balances due to a decline in inventory receipts and a $6.7 million decrease in prepaid expenses and other assets.

Current wording

During the nine months ended April 27, 2024, cash provided by operating activities from continuing operations was $20.0 million, which consisted of a net loss from continuing operations of $83.1 million, adjusted by non-cash charges of $82.8 million and a $20.4 million change in net operating assets and liabilities. The non-cash charges were primarily driven by $59.9 million of stock-based compensation expense and $36.5 million of depreciation, amortization, and accretion, partially offset by $12.9 million of changes in inventory reserves. The change in net operating assets and liabilities was primarily due to a $29.0 million change in gross inventory balances due to a decline in inventory receipts to bring inventory balances in line with current demand.

Previous wording

During the six months ended January 27, 2024, cash provided by investing activities from continuing operations was $8.6 million. This was primarily due to the maturities of available-for-sale securities of $16.0 million, partially offset by purchases of property and equipment of $7.4 million.

Current wording

During the nine months ended May 3, 2025, cash used in investing activities from continuing operations was $59.7 million. This was primarily due to purchases of securities available-for-sale of $164.1 million and purchases of property and equipment of $12.1 million, partially offset by sales and maturities of available-for-sale securities of $116.5 million.

Previous wording

During the six months ended February 1, 2025, cash used in investing activities from continuing operations was $39.0 million. This was primarily due to the purchases of securities available-for-sale of $96.6 million, partially offset by the sales and maturities of available-for-sale securities of $65.1 million.

Current wording

During the nine months ended April 27, 2024, cash used in investing activities from continuing operations was $39.5 million. This was primarily due to purchases of securities available-for-sale of $47.9 million and purchases of property and equipment of $10.3 million, partially offset by the maturities of available-for-sale securities of $18.3 million.

Previous wording

During the six months ended January 27, 2024, cash used in financing activities from continuing operations was $8.7 million, primarily due to payments for tax withholding related to vesting of restricted stock units.

Current wording

During the nine months ended May 3, 2025, cash used in financing activities from continuing operations was $12.4 million primarily due to payments for tax withholding related to vesting of restricted stock units.

Previous wording

During the six months ended February 1, 2025, cash used in financing activities from continuing operations was $8.2 million due to payments for tax withholding related to vesting of restricted stock units.

Current wording

During the nine months ended April 27, 2024, cash used in financing activities from continuing operations was $11.8 million, primarily due to payments for tax withholding related to vesting of restricted stock units.