Stitch Fix's Q3 2025: Contradictions in Customer Growth, Revenue Expectations, and Advertising Strategies

Revenue Growth and Client Engagement:
- Stitch Fix reported revenue of $325 million for Q3, up 0.7% year-over-year and 4.1% quarter-over-quarter.
- This was driven by increased average order value (AOV), with a 10% year-over-year increase, and higher keep rates and AUR.

Assortment and Product Trends:
- Stitch Fix's AOV has grown for the seventh consecutive quarter, with particular strength in athleisure, wide leg denim, and footwear.
- This growth is attributed to an increased variety in on-trend styles and expansion into adjacent categories like footwear and accessories.

Client Acquisition and Retention:
- The company achieved two consecutive quarters of year-over-year new client growth and has seen improved 90-day LTVs.
- This is due to successful targeting of clients for whom the service resonates and improvements in client-stylist relationships.

Operational and Financial Strength:
- Stitch Fix ended Q3 with $242 million in cash and no debt, generating $16 million in free cash flow.
- This financial strength is supported by operational efficiencies, including improved inventory turns and strategic investments in growth.