Quick Overview

  • Stitch Fix reached a transformation milestone in its earnings report released Wednesday: active clients in the third quarter of fiscal 2026 increased sequentially to 2.3 million, but still declined nearly 2% year over year. According to William Blair analysts, this marks the first quarter-over-quarter growth since 2021.
  • Net revenue per active client increased 6.6% year over year to $578, a record high. Driven by this, the company's net revenue grew 4.7% year over year, exceeding $340 million, marking the fifth consecutive quarter of growth.
  • Gross margin declined 50 basis points year over year to 43.7%. Net loss narrowed significantly from over $7 million in the same period last year to $1.5 million.

Deep Insights

Under CEO Matt Baer—who joined from Macy's three years ago—Stitch Fix is no longer solely pursuing growth, but rather focusing on cultivating active clients that can be retained, including re-engaging lapsed clients and providing them with more reasons to purchase.

Matt Baer said on Wednesday's analyst call that total active clients and the number of new clients choosing regular deliveries are both growing. Citing Circana data, he noted that the company's third-quarter performance "significantly outperformed" the overall U.S. apparel market.

The third-quarter results—including higher retention rates, more active and new clients, and increased sales per active client—validate a business model that others have abandoned and that has increasingly drawn skepticism.

William Blair analysts noted in a Thursday report that Stitch Fix leveraged its rich data to optimize merchandise assortment and customer experience, and despite increased marketing costs, gross margin still expanded.

"Taken together, these results strengthen market confidence in a company that many investors had previously undervalued. New management appears to have better control of the business model and is building a more profitable and sustainable customer base," analysts wrote in the research note. "Although the company has historically underperformed in identifying and reaching potential customers, we believe Stitch Fix today has a clearer understanding of 'who to sell to' and 'how to sell.'"