Stitch Fix, Inc. Q1 FY2026 earnings call

• Q1 was a strong start with revenue and adjusted EBITDA exceeding outlook, accelerating 7.3% year over year and nearly 4% of revenue respectively.
• Becoming the retailer of choice by leveraging AI, stylists, and leading brands to deliver personalized shopping experience.
• Focused on four areas to enhance client experience: enhanced client engagement features, deeper client-stylist relationships, best-in-class assortment, and increased business model flexibility.
• AI-powered innovations like Vision (generative AI style visualization) and AI style assistant driving client engagement and retention; enterprise-wide AI use for efficiencies and competitive advantage.
• Strong holiday performance with record freestyle sales during Black Friday to Cyber Monday, and new features like family accounts supporting gifting.

Revenue for Q1 was $342.1 million, up 7.3% year over year. Adjusted EBITDA was $13.4 million, nearly 4% of revenue. Fixed AOV was up nearly 10% in Q1. In women's business, key seasonal categories like sweaters, coats, etc. grew 19% year over year; sneakers up 63% and wide-leg denim up 217%. Men's business had double-digit revenue growth, with seasonal categories like fleece, sweaters growing 57% combined, denim up 30% and sneakers up 24%. Ended Q1 with 2.3 million active clients, at the high end of expectations. Revenue per active client reached $559, up 5.3% year over year, marking the seventh consecutive quarter of growth. Gross margin was 43.6%, in line with FY 2026 range of 43% to 44%. Contribution margins remained above 30% for the seventh straight quarter. Inventory was $141.5 million, up 18.8% year over year.

• Raised full-year guidance for FY '26: expects total revenue between $1.32 billion and $1.35 billion, total adjusted EBITDA between $38 million and $48 million, and full-year free cash flow positive.
• For Q2: expects total revenue between $335 million and $340 million, and adjusted EBITDA between $10 million and $13 million.
• Guided to third quarter of accelerating growth in Q2 based on Q1 performance and robust demand, considering consumer confidence, inflation impact on discretionary spending, and tougher AOV comps in the back half of the year.

• Actual results could differ materially from forward-looking statements.需关注SEC filings中提到的因素，如宏观经济环境、消费者信心、通胀、AOV高基数对比等可能影响结果的风险。

Q: Could you provide a little bit more color on new customer behavior and just your general view on their stickiness?

A: We've seen nine consecutive quarters of improving LTV for new client acquisition. New clients and reengaged clients are staying longer and spending more. Men's business has returned to sequential increases in active clients, and we expect sequential active client growth in Q3.

Q: Can you talk about where do you think that market share is coming from? And on gifting, and around advertising?

A: Market share gains come from taking share from retailers not offering personalized experience. Gifting is stronger due to family accounts and new engagement experiences. Advertising is spent methodically based on CAC to LTV ratios, with seasonality, and we'll lean in where opportunity is found.

Q: Any read on the early adoption of consumer-facing AI and visualization tools?

A: Citrix Vision has far exceeded expectations in engagement. Clients use it to share with stylists, purchase directly, and share on social platforms, driving virality and organic growth.

Q: Could you bridge the gross margin performance decline and what to expect for Q2?

A: Gross margin decline is due to transportation expenses, category investments, and tariffs. Q2 margins are expected to be in similar range as this quarter, within the full-year guidance range.

Q: Break down the opportunity with different brands, drivers of net revenue per active client, and drivers of active clients?

A: Brands are attracted due to personalized experience and positive client-brand interaction. RPAC is driven by new client LTV and AOV growth. Active clients are improved by new client acquisition, reengaged clients, and lower dormancy, with seasonality considered.