Stitch Fix Q2 Earnings Beat Expectations Despite Client Decline

Stitch Fix announced better-than-expected fiscal Q2 earnings, with an EPS loss of $0.05 versus the anticipated $0.11 loss. Revenue rose to $312.1 million, exceeding estimates, but active clients dropped by 15.5%, highlighting retention issues.

Date: 12-03-2025

AI Rating: 6

Earnings Per Share (EPS): Stitch Fix reported an EPS loss of $0.05, which is a significant improvement compared to the EPS loss of $0.30 in Q2 2024 and is better than the estimated loss of $0.11. This signals a positive trend in financial performance from a loss perspective, indicating improved management efficiency. Rating: 7

Revenue Growth: The company generated revenue of $312.1 million, exceeding analysts' estimates of $298 million, though it still represents a decline of 5.5% year over year compared to Q2 2024's revenue of $330.4 million. Although the company faced a revenue drop, the ability to surpass estimates shows operational success. Rating: 6

Client Engagement Challenges: A notable 15.5% year-over-year decline in active clients to 2.37 million raises concerns about client retention strategies. This suggests that, despite operational efficiencies, the company needs to focus on rebuilding its client base and improving engagement to stabilize revenue in future quarters. Rating: 4

Adjusted EBITDA: Stitch Fix achieved an adjusted EBITDA of $15.9 million, well above the guidance of $8 million to $13 million, marking a substantial improvement over last year's figures. This indicates effective cost management and operational efficiencies, with a 261.4% increase from $4.4 million in Q2 2024. Rating: 8

Conclusion: Overall, while the earnings performance shows positive signs, the drop in active clients presents a significant risk. Stitch Fix's future outlook will largely depend on its ability to retain and attract clients in light of the current challenges. Investors should closely monitor retention strategies and future revenue guidance. The mixed performance across metrics suggests a moderate but cautiously optimistic investor sentiment.

Stocks: NASDAQ:SFIX