Stitch Fix (SFIX, Financial) anticipates its adjusted EBITDA for the fourth quarter to range between $3 million and $7 million. The company has also provided guidance on its gross margin, expecting it to fall towards the lower end of 44% to 45% for the fourth quarter. Looking ahead to the full fiscal year 2025, Stitch Fix predicts its gross margin will stabilize in the middle of this same range.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 5 analysts, the average target price for Stitch Fix Inc (SFIX, Financial) is $4.70 with a high estimate of $6.00 and a low estimate of $3.00. The average target implies an downside of 1.88% from the current price of $4.79. More detailed estimate data can be found on the Stitch Fix Inc (SFIX) Forecast page.
Based on the consensus recommendation from 6 brokerage firms, Stitch Fix Inc's (SFIX, Financial) average brokerage recommendation is currently 3.2, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Stitch Fix Inc (SFIX, Financial) in one year is $2.60, suggesting a downside of 45.72% from the current price of $4.79. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Stitch Fix Inc (SFIX) Summary page.
SFIX Key Business Developments
Release Date: March 11, 2025
- Revenue: $312.1 million, down 5.5% year over year and 2% quarter over quarter.
- Adjusted EBITDA: $15.9 million, representing a 5.1% margin, up 380 basis points year over year.
- Contribution Margin: 33%, marking the fourth consecutive quarter above 30%.
- Gross Margin: 44.5%, up 110 basis points year over year.
- Active Clients: 2.4 million, down 16% year over year and 2.6% quarter over quarter.
- Revenue per Active Client (RPAC): $537, up 4% year over year.
- Advertising Expense: 7.8% of revenue, down 160 basis points quarter over quarter.
- Net Inventory: $109.6 million, down 13% year over year and 8% quarter over quarter.
- Free Cash Flow: Negative $19 million for Q2.
- Cash and Investments: $230 million with no debt.
- Annual Revenue Guidance: Between $1.225 billion and $1.240 billion.
- Annual Adjusted EBITDA Guidance: Between $40 million and $47 million.
- Q3 Revenue Guidance: Between $311 million and $316 million.
- Q3 Adjusted EBITDA Guidance: Between $7 million and $10 million.
- Full Year Gross Margin Guidance: Approximately 44% to 45%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Stitch Fix Inc (SFIX, Financial) exceeded expectations in Q2 with revenue of $312.1 million and adjusted EBITDA of $15.9 million.
- The company achieved a 710 basis point sequential improvement in year-over-year revenue comps and a contribution margin of 33%, marking the fourth consecutive quarter above 30%.
- Both the Men's business and Freestyle channel returned to year-over-year revenue growth, indicating positive momentum.
- Investments in improving the quality of the assortment and inventory management have led to a 9% year-over-year increase in Average Order Value (AOV).
- The company raised its annual guidance for fiscal 2025, reflecting confidence in continued performance improvements and strategic investments.
Negative Points
- Net revenue for Q2 was down 5.5% year over year and 2% quarter over quarter, indicating ongoing challenges in achieving consistent revenue growth.
- Active clients ended the quarter at 2.4 million, down 16% year over year and 2.6% quarter over quarter, highlighting difficulties in client retention and acquisition.
- Free cash flow was negative $19 million in Q2, attributed to timing of working capital requirements related to inventory purchases.
- The company anticipates continued active client declines into FY26, which could impact future revenue growth.
- Despite improvements, the company faces potential challenges from tariffs and macroeconomic uncertainties, which could affect future performance.
