Stitch Fix grew fiscal 2026 revenue 6.4% to $1.35 billion as spending per client rose 7.8% while active clients fell 1.4%; the net loss narrowed to $12.6 million, but gross margin slipped and management expects weaker demand in fiscal 2027.
Revenue
$1.3B
+6.4% YoY
Net income
-$13M
Diluted EPS
$-0.09
Operating margin
-1.6%
Overview
Stitch Fix sells clothing mainly through "Fixes": boxes of items picked by a stylist with help from its algorithms, where the client keeps what they like and sends the rest back. Clients can also buy directly in its app ("Freestyle"). In fiscal 2026 (the 52 weeks ended August 1, 2026), revenue grew 6.4% to $1,348.1 million even though the number of active clients fell 1.4%. All of the growth came from existing clients spending more. Net revenue per active client rose 7.8% to $592, which the company attributes to clients keeping more items per Fix and to higher average prices per item.
The net loss narrowed from $28.7 million to $12.6 million. That improvement came from overhead growing more slowly than sales, not from better margins on the clothes themselves. Gross margin actually slipped 70 basis points (0.7 percentage points).
Key metrics
Metric
FY2026
FY2025
YoY Change
Revenue
$1,348.1M
$1,267.2M
+6.4%
Gross margin
43.7%
44.4%
-0.7 pts
SG&A (% of revenue)
45.3%
47.5%
-2.2 pts
Operating margin
-1.6%
-3.1%
+1.5 pts
Operating loss
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-$21.7M
-$38.9M
loss narrowed by $17.2M
Net loss
-$12.6M
-$28.7M
loss narrowed by $16.1M
Diluted EPS
-$0.09
-$0.22
loss per share narrowed by $0.13
Adjusted EBITDA (non-GAAP)
$53.4M
$49.1M
+8.6%
Free cash flow (non-GAAP)
$19.8M
$9.3M
+114%
Active clients
2,277,000
2,309,000
-1.4%
Net revenue per active client
$592
$549
+7.8%
Operating margin is the share of revenue left after running the business, before interest and tax. Here it is negative, meaning an operating loss. Fiscal 2025's net loss includes a $0.1 million gain from the discontinued UK business, and its loss from continuing operations was $28.8 million. Fiscal 2026 had no discontinued operations.
Takeaway: Stitch Fix returned to revenue growth after a decline in fiscal 2025 without growing its customer base. Per the 10-K, active clients have fallen year over year at the end of fiscal 2023 and at every reporting date since. Getting each remaining client to spend more is lifting sales, but that lever has limits, and management itself warns that fiscal 2027 will be hurt by weaker consumer spending.
Where the growth came from, and where it didn't
Spend per client, not client count. Net revenue per active client (the last four quarters' revenue divided by clients at year-end) rose from $549 to $592. The 10-K credits "higher average order values, driven by the number of items kept by our clients per Fix increasing and higher average unit retail prices." Some of the higher prices are deliberate. The company says it made "selective pricing adjustments on certain merchandise" to offset tariff-driven increases in what its suppliers charge.
The client base kept shrinking. Active clients (anyone who checked out a Fix or was shipped a Freestyle item in the prior 52 weeks) fell by about 32,000 to 2,277,000. The company says "inactive clients outpac[ed] client additions," which it "largely attribute[s] to client conversion and retention challenges." That happened even though advertising spend rose 10.5%, from $117.3 million to $129.6 million.
Margins: product got less profitable, overhead got leaner
Gross margin is the share of revenue left after paying for the merchandise, shipping and payment processing. It fell to 43.7% from 44.4%. The filing cites higher transportation costs and lower product margins, partly offset by better inventory health (fewer write-downs of slow-selling stock). Cost of goods sold grew 7.9%, faster than revenue's 6.4%.
The profit improvement came further down the income statement. SG&A (selling, general and administrative costs: staff, stylists, warehouses, marketing, offices) rose only $8.3 million, or 1.4%, so it fell to 45.3% of revenue from 47.5%. The filing attributes the lower ratio to "lower compensation and benefits expense as a percentage of revenue." Stock-based compensation, a non-cash part of pay, dropped from $56.7 million to $46.4 million.
Two items inside those costs are worth noting:
$4.2 million of one-off legal fees tied to a 2022 securities class action over past statements about Freestyle. In February 2026 the company agreed to a $32.0 million settlement. It says the amount is within its insurance limits, and the settlement still needs final court approval. The settlement accrual and the matching insurance receivable both sit on the balance sheet. Prepaid expenses and other current assets jumped from $20.6 million to $53.1 million, and the filing records the insurance receivable in that line.
Adjusted EBITDA, the company's own profit measure, excludes stock-based pay, depreciation, interest, tax and one-off costs like those legal fees. It rose 8.6% to $53.4 million, or about 4.0% of revenue versus 3.9% a year earlier. Most of the gap between that figure and the GAAP net loss is the $46.4 million of stock-based compensation.
Cash and capital
Operating cash flow was $39.1 million, up from $25.6 million. After $19.2 million of spending on property and equipment, free cash flow (cash left after that investment spending) roughly doubled to $19.8 million.
The company bought back stock after doing none in fiscal 2024 or 2025. It repurchased 7.2 million Class A shares for $26.4 million, and $93.6 million of its $150 million authorization remains. It also paid $17.6 million in tax withholding on employee share vesting.
At year-end it held $95.3 million of cash and cash equivalents plus $125.6 million of investments. Nothing was drawn on its $50 million credit line.
Inventory rose modestly to $122.7 million from $118.4 million, which the company ties to "higher inventory receipts and investment in greater assortment."
Outlook
The 10-K gives no numeric fiscal 2027 guidance, but its commentary is cautious on two fronts:
Demand: "Beginning in the fourth quarter of fiscal 2026, we began to see impacts" from inflation, recession worries and trade-policy uncertainty. The company expects these conditions to "negatively impact our business in fiscal 2027."
Costs: cost of goods sold "increased in fiscal 2026 and we expect will continue to rise, primarily due to higher transportation cost from rising oil prices and continued merchandise assortment investments."
Our read: fiscal 2026 showed the business can grow revenue and cut losses with a smaller client base, but both drivers are running into limits. Higher prices and bigger baskets can't make up for a shrinking client count indefinitely. Gross margin is already moving the wrong way, and management expects more cost pressure. The number to watch is active clients. A return to year-over-year client growth would matter more than another rise in spend per client.