Stitch Fix 2025 Q3 Earnings Beats Expectations as Net Income Improves 65.4%

Stitch Fix(SFIX) reported its fiscal 2025 Q3 earnings on Jun 11th, 2025. Stitch Fix's Q3 fiscal 2025 results surpassed analyst expectations, with revenue of $325.02 million, exceeding the forecasted $314.4 million. The company raised its full-year revenue guidance to $1.254 billion-$1.259 billion, up from the previous forecast of $1.225 billion-$1.240 billion. Adjusted EBITDA guidance was also increased to $43 million-$47 million, indicating positive momentum. Despite macroeconomic challenges, the company remains optimistic about its transformation strategy and future growth prospects.

Revenue

The total revenue of Stitch Fix increased by 0.7% to $325.02 million in 2025 Q3, up from $322.73 million in 2024 Q3.

Earnings/Net Income

Stitch Fix narrowed losses to $0.06 per share in 2025 Q3 from a loss of $0.18 per share in 2024 Q3 (66.7% improvement). Meanwhile, the company successfully narrowed its net loss to $-7.38 million in 2025 Q3, reducing losses by 65.4% compared to the $-21.33 million net loss reported in 2024 Q3. The EPS improvement indicates a positive trend for Stitch Fix.

Price Action

The stock price of Stitch Fix has dropped 6.03% during the latest trading day, has tumbled 9.79% during the most recent full trading week, and has surged 22.78% month-to-date.

Post-Earnings Price Action Review

The strategy of buying SFIX when revenue beats and holding for 30 days resulted in poor performance. It yielded a return of -84.08%, with a Sharpe ratio of -0.37 and an excess return of -172.84%. The strategy also faced a maximum drawdown of -97.58% and exhibited significant volatility at 83.79%, indicating high risk and substantial losses. These figures underscore the challenges investors faced with this approach, emphasizing the critical need for caution and strategic planning when engaging in post-earnings trades. The substantial risk, coupled with significant losses, highlights the importance of considering broader market factors and individual stock performance dynamics before making investment decisions.

CEO Commentary

Matthew Baer, CEO & Director, highlighted Stitch Fix's return to year-over-year revenue growth, driven by a 10% increase in average order value (AOV) and successful initiatives in client experience. He emphasized the company's transformation strategy, which has strengthened operational efficiency and client engagement. Baer noted, “Our clients are responding positively to the increased flexibility we provide” with larger Fix offerings contributing to AOV growth. He acknowledged external challenges, including macroeconomic pressures, stating, “we remain focused on what we can control.” Overall, Baer expressed optimism about the future, asserting, “the momentum of the Stitch Fix business is undeniable.”

Guidance

For Q4 FY '25, Stitch Fix expects total revenue between $298 million and $303 million and adjusted EBITDA between $3 million and $7 million. The full-year revenue outlook is revised to between $1.254 billion and $1.259 billion, with adjusted EBITDA projected between $43 million and $47 million. While active client numbers may decline sequentially in Q4, the company anticipates sustained growth in average order value and plans to remain free cash flow positive for the year.

Additional News

In recent weeks, Stitch Fix has made notable changes in its leadership and business strategy. The company appointed Timothy Baxter and Fiona Tan to its Board of Directors, bringing a wealth of experience in retail leadership and technology innovation. Baxter was previously the CEO of Express, Inc., while Tan serves as CTO of Wayfair Inc. These appointments are part of Stitch Fix's transformation plan to enhance its personalized shopping experience and drive sustainable growth. Furthermore, Stitch Fix has partnered with Affirm to offer flexible monthly payment plans to its customers, expanding its payment options and catering to consumer preferences. These strategic moves highlight Stitch Fix's commitment to strengthening its market position and adapting to evolving consumer needs.