SFIX - Earnings call transcript Q4 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon, and thank you for standing by. Welcome to the Fourth Quarter Fiscal Year 2024 Stitch Fix Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the call over to Hayden Blair.

Hayden Blair

Good afternoon, and thank you for joining us today for the Stitch Fix Fourth Quarter Fiscal 2024 Earnings Call. call Chief Baer, Financial the and Executive on Aufderhaar, David Officer. me are Chief Matt Officer; With

We have section posted of on in investors.stitchfix.com. a our complete link today's fourth quarter release A also the XXXX conference on site. call Quarterly be the Results to of can website, press our webcast financial found results

differ contemplated We to remind and making our this on statements involve Reported would not everyone risks be results those future like be an call, Actual uncertainties. materially forward-looking statements. could considered results forward-looking by indication that we from performance. which should will of as

filed expect filings Please as annual Risk the us sections results our law. report as obligation the filed the differ, XXXX well factors based any today's of for Form fiscal could Factors report on with filed our update week. Also with XX-K information later fiscal review call SEC and for a the for to We disclaim by discussion which and date. except press on of Form today the SEC previously our XX-K in as the cause particular, annual of to that forward-looking that issued to forward-looking available required this statements to on statements, this are on be as note the any we XXXX, release

results. financial provided These to the for not Reconciliations website. GAAP GAAP are are to certain most measures. Investor measures press in the a During intended non-GAAP this release discuss substitute measures we call, comparable financial on our non-GAAP will be Relations directly our

operation. call all business we continuing of represent as metrics began discussed In a to report fiscal today's quarter our XXXX, the operations. our on U.K. Accordingly, discontinued first

this being will call webcast this shortly. on of available website, Relations our entirety and be on a replay website is Investor the call its Finally, in

the to call let Matt. And over turn now me

Matt Baer

fourth by I'm Stitch CEO on of the for end my Good results the pleased team has line. first completed both quarter, as the and afternoon. joining Thanks our Fix, year top significant made. at also encouraged we guidance the us. at bottom and progress in delivered our I'm recently I high that

continue strategy. We transformation our to execute

retail the our of We are business our embedding operations, strengthening efficiency foundation practices, our organizational increasing the and of by best optimizing successfully structure.

We also we our how bring we reimagine begun from assortment to them. have we to how styles clients to engage those the offer with

Through X we adjusted gross last delivered these efforts, the in positive expanded FY quarters. and margins for 'XX EBITDA

of cash and million $XXX debt. have cash, equivalents We with investments no

to revenue year expect to improvements and the return fiscal FY end 'XX. expect continue drive Looking to this ahead, we to we growth by of

work Since we have and Stitch phase. at hard phase, includes transformation Fix, phases: and distinct build a I strategy, formalizing growth a rationalization our been which a phase, joined executing X

more nimble period over place right critical to the was took which our assessment. to position year operate and as the was phase, in foundation had rationalization enable our financial a we began this to organization. It and during Our of business strengthen past a improve ensure us place the we and phase priorities efficient of that

As others, among part These centers, million resulted savings of head closed in the $XXX continued 'XX. we rightsized FY SG&A and U.K., fulfillment corporate management. cost of count exited discipline actions, our X over this, in our

work science, and of have our day invest reimagine execute we Today, data Of note, transformation the includes in X. as to squarely as experience. our strategy, model phase we are client build the efforts core which we to which our foundational AI been our in continuing since well are transformation, our to as

underperforming we've This our made we inventory enhancements are shipments, our and few our improved a to merchandise capabilities. our strengthening tool, streamlined several last CRM how leverage includes our AI to buying the reduce examples our architecture, Over shared optimized how foundation. calls, assortment pricing we've advanced of algorithms

among to efforts advance the many business. continue these across others, We

how our progress and proud we Now a our are are life we am dynamic more bring in reimagining share of to client a making experience. announced to to Stitch series modern I changes on Fix. the We first recently

of is clients. know key how One our we differentiators well our

success a tied discover to always our styles that they Our will helps the has and ability been experience love. personalized deliver to convenient clients

spent we as and However, and future. over we market have expectations our the and quickly the past not needs, enough. retail year the serve into and to did to better clients' adapt evolving better working made I'm evolve, today about them understand the clients' We've several changes our the assortment past service our years, excited

they First, interactive we and us. to fit, for budget clients their have created begin visual when and their preferences with a way more relationship communicate style, engaging

To and our that that their to are their them we that snapshot their clients specific style personality the presenting style, we StyleFile, individual personalized contribute to with demonstrate it. get shares a elements

fit fixes, a more we million collected unique insights XXX Our client's from us that leverage each proprietary and style to enable which have than reflects models, preferences. AI present StyleFile the

conversion X% received testing, our uplift saw In we a from StyleFile. who early clients in a

While how be clients' sign to and that up preferences. will are our clients. this believe we existing of first and valuable we all introduced style understand We meaningful StyleFile launching new service, a women's as today, demonstrate men's drive will engagement for clients the to they when tool

Second, our they of increasing the relationships build so can stylists deeper we clients. visibility are with

well profiles will and the we stylist's this by expertise each stylist interest. which unique are as of showcase portfolio ways One their related doing work creating as is

As also which ideas outfit cards, clients first photos recently with in style the to Fix a clients. quarter, the These further this was a digital launched each and written by to we saw are XX% When photo, personalized include with accompany began plan stylist and stylist presenting opportunities on relationships notes step, a to clients. shared write note the additional stylists introduce deepen future. We to in increase these we a engagement. photos

response fixed we feedback, up includes receive up are our to This a items update model. explore flexibility expanding trends new life to beyond city of as new a box. help client moving current well X enhances traditional opening for body starting ability for increasing job, the clients the to Third, a we clients X the like are This opportunity to In our transformations. items. as their events, or our to wardrobes both major better in

When offering. items, offering Fix the ability positive for to clients more we of with seeing upwards our compared than are to greater receive revenue when X traditional results XX%

change and We have are reduction making additional clients recurring it also seamless flexibility recognize in adjust This constantly clients an customers' impressive to shipments. for outfitting evolving, our XX% cadence. more off added their yielded turning Fix by our needs

Fourth.

it matrix price points. right brands, assortment. the well be work now our and FY the we are we our extensive bring to our newness to during styles business retail phase must assortment any positioned successful, to 'XX, brand in rationalization have and into streamline After For completed considerable

amount thousands styles a assortment triple expect and this fiscal newness end the of of new of adding QX percentage our broader year. to in are We as by the of

of women's trend-right offering both are launch women; X offers styles private Post, part business. we modern, and and The to which our Montgomery in new and brands: men's Commons, sophisticated contemporary As beginning this, workwear to

Spruce, some clients meet as the the We In us our experience extend for segments. forward Market how look styles popular needs as our current brands, of these to Stitch addition, new are most trend of kids. styles extending better & well offer to Wander We now will client successfully we and Fix XX.Algo private help to

It update recently modern, our feel with new help brand deepen and and the also brand than significant look identity, further a connections is refreshed We The in bold. is a introduced first is to more to it designed clients. our decade. us

continue which professional In our execute includes we addition, value marketing our convenience to strategy, the segments provides. service targeting that

appreciation in new we QX. client than teachers The during campaign rate teacher double conducted our As week conversion a campaign an dedicated example, average. more targeting a yielded

and continue of moving announced program, broader we addition target segments our as And Fix recently X transformative support which also this To for will time, resonates. of Stitch part we know forward, experience the service deep of specific to marketing our Tan, Board during technology. we in retail highly who forward Tim Fiona leaders our extensive brings who accomplished Directors: retail I brings apparel, both with expertise partnering to and in of to merchandising; them. look Baxter, retail

time. results. a to encouraged strategy I'm previously, while lot our do, confident our shared I've take and still And initial as Now there by is in transformations

We rationalization phase, approach our began a to in we so FY disciplined our business, taking change with and now are which the then 'XX. build trajectory to can of growth ahead look

outlook. over I'll share turn our results Now David future and call the financial to to

David Aufderhaar

Matt. Thanks,

into Let's the get results.

was X,XXX,XXX strong active FY future. FY focused on strategy cost leverage get revenue In XX% a approximately billion, to $X.XX line we revenue QX back deliver foundation down ended 'XX in drive on the our in continue going We 'XX with implemented to into profitable growth FY structure year, full year-over-year. 'XX. the belief right This year decline, with business year-over-year. FY of and our results the build XX% to 'XX. expectations, year business to we've net a past in we Despite of that my the can sustainable, Our us decrease we rationalizing the reinforce clients,

carrier while Our annual teams since XXX merchandising diversified 'XX. basis XX.X%, margins gross highest our resulted our in inventory on points transportation mix. margin portfolio of optimizing 'XX year-over-year, our FY FY our teams focused up This

in facility resulting we fixed consolidating savings. allowed our service more And labor actively footprint to than identify by cost compensation, operations, We us end This customer our stock-based potential expenses manage fixed including costs, $XX labor above our expenses, our warehouse each reduced across efficiency category in reduced contribution our We also We costs excess range. 'XX. margins of by drove historical variable and our styling, space. high subleased operating the reviewed of and variable to FY teams. million

FY cash, million year generated or $XX.X in These deliver of margin, sheet, points basis FY we investments and the free in cash We cash 'XX, flow including adjusted for year equivalents million debt. no million with with $XX.X $XXX the actions up a compared X.X% a 'XX. EBITDA to ended to of and allowed XX balance us strong over

with As stand and today. Matt we're said, time, transformations encouraged we take where

being methodical investing areas We in approach business. targeted and in of are the our

continue approach 'XX we through build as will profitable We take to FY this sustainable, growth. towards

year-over-year year-over-year 'XX being XX-week active provide 'XX consisted Revenue that resulted compared in results, the to for I quarter-over-quarter. $XXX, XX a a QX XX-week X% down Before which year-over-year basis or I $XXX.X and XX% QX net weeks, a row FY discuss in XX quarter per FY year-over-year down to revenue second reminder standard to grew and on a year. X% quarter-over-quarter. X% down our XX% quick up was of client want weeks million, QX up

points in came for quarter mostly points in of by XX for margin year-over-year XX up driven promotional by summer row, Fixed up quarter-over-quarter. year-over-year at AOV, was was down rate. basis activity. up quarter, related net fourth and quarter-over-quarter. XX which to helped was XX.X%, margins driven the drive and The QX, quarter-over-quarter points points XXX revenue a our the basis QX basis year-over-year decrease keep mainly reduced PAC X% merchandise up basis improvement Advertising in gross

approximately we to continued in align variable points QX with was $X.X XX The the adjusted million down XX% points demand, cash XX% efforts free in of quarter. ended we or basis and XX We was and EBITDA quarter-over-quarter. with to or $X.X net inventory inventory down continued cost X% leverage position year-over-year our basis $XX.X P&L. margin, mainly quarter-over-quarter million, of increase the up quarter-over-quarter QX year-over-year down flow our as million generated due

Turning to our outlook.

requirements revenue million. year also be the And full our $XX be will 'XX, to This for the the variability cash see we $X.XX total the working between year. $X.XX we inventory be total billion capital year, billion. we of Though $XX to similar quarters to we positive year free between and timing EBITDA due purchases. assumes to adjusted flow may full guidance between million and this expect for For some FY to expect related

our quarter between expect total million. million For first of $XXX and be $XXX we FY revenue to 'XX,

QX to be EBITDA million. $X million expect $X We between and adjusted

to fall/winter, margin X% to and be of expect of advertising in to expect balances of approximately inventory year. QX X% the XX% inventory we receipts prior years, expect to to remaining turns we QX improve in full XX%, Similar to be the and to approximately due We gross stable both the our revenue. rest year through ahead rise expect to timing of QX relatively but

to the doing excited step reimagine a work foundation client our business I'm Taking of back, about we're the strengthen experience. and the

metrics, We many our in to improvement continue on see those build in of FY 'XX. and key trends we'll

active ways dynamic 'XX, healthy provides in to quarter-over-quarter acquiring return of to end a clients will will on focused during contribute and engaging in FY We so our revenue which FY This a existing continuing the to year-over-year increase remaining profitability. a and do leverage growth clients, clients by us by to path drive 'XX.

that, back to Matt us With it turn I to close over out. will

Matt Baer

Thanks, David.

profitable period of of our FY differently. us the work advancing Before making today. energized returning for in and remain are on that everything we to want demands employees of and to this want to team our forward by I'm appreciation work I'm where further transformation by the reiterate that done we we to bright encouraged proud has also this together close, strategy the are to Stitch change 'XX. to strategy see progress I to sustainable, throughout dedication future I transformation, we we think the and growth impressed and I my both Fix and And get by look company. express transformation their hard for

With questions. the turn call now operator I'll that, to over the for

Operator

comes [Operator of line Youssef first Truist. Our Instructions] question of the from Squali

Youssef Squali

Two please. questions,

to of returning revenue you do So quite guys a think us is time, growth later bit I of to than by most expected fiscal when XXXX of that. end

are end until the meaning also you it the clients in factors guys hold that company-specific active that expect Anything biggest can there? taking XXXX? And for active talk positive that's you on dynamics? that true macro turn is maybe does comment not So well, Or clients going all into about do as of the to account? gating you

Matt Baer

in path journey along speak And to can growth path revenue to I'll today. insights then Matt. provide well. some that we some environment about additional how details clients of this what active well to as And will your terms David think around our I'll also answer growth. as how more thinking back generally question, get the and that terms it's hopefully, macro of we're we about in as to share Youssef,

trend I'd of then fiscal reminder, joined down quarter ago, And first, fiscal year what middle So that is, over over that say I what proud points in think that about by XX%. over fiscal then results Stitch just -- down XXX and a finishing just since this we where of slowed revenue as the finished year clients. the accomplished the QX I I'm improved finished we've have basis we're ultimately XX% most and in in a were recent think, Fix our when I active we And delivered 'XX. year, decline then. we of also we sequential

basis just also we XXX revenue almost in projects guidance throughout and the shared improvement Now improvement of year. sequential 'XX another revenue the shows fiscal points in

our to there. client And revenue we count pretty considerably expect track we'd have to where active

And take before, core our strategy confident in customer transformations prior a As these and we've of strategy the as We're producing to right to things. I've confidence that is growth methodical taking that will our One return we're that time. stated revenue value end is one. on that approach discussed we're our And enable results. proposition, share, we'll is transformation by the confident our few And the 'XX. fiscal calls, continue us meets to the to that need. rooted is

that At our delivers style preference, a assortment we know aspire many their their value clients X day know home Stitch and us Fix, assortment that service, to about enables actually an the This service that retailers provide fits. matches more incomparable course to with relationship. orientation, over could on their it's clients' of than aligns to

is is the that in producing strategy place have Second results. that we

to we that profitable in ensure allow cash, that's we results to required million that built it's both the healthy sheet, one to, balance a continue execute in gives and just disciplined our and runway us rationalization on us will no strong and debt a return transformation that a to The financial when this to do foundation, and growth, long $XXX spoke run. of the it's be sustainable creating phase it's to

As significant. just the that also seeing brand us and in enhancements experience extremely These that the from in an launch been will I phase, to the are course we clients. encouraged year. improvements have I'm feedback by and the But our our and out new this of enhance to build will stated enable ambitious performance results positive, business map is engage beginning, also road reimagined we're the in remarks, the roll how of this continue The has to now client iteration continue the squarely identity. first over we're the recent the we opening of

and in the years, clients' the we our And for it's done market assortment this did this. our it over as quickly to our enough, fiscal an assortment excited as adapt of retail again, of overhaul expectations by the and to address and our our I to feat work remarks, going their to think ultimately amount needs meet several assortment note, triple of prepared important extremely But I'm help and has not too, the end team us that will clients time year past the us merchandising shared I impressive time newness in better as to exceed well. our that evolve, and is by the takes take expectations. the

to will in I'm confident disciplined that believe profitable one sustainable And a I and So in several growth. and transformations strongly transformation to that take the growth judicious that that successful the can years. return is will retail, we lead future.

focused in else, a our is exclusively is manner Apparel think that's period, we're I ability That's one the what to that there our some think Accessories, I'm to which everyone working In Specific thinking in which guide, what's like is just and for but the sensitivity we're contemplated also throughout team category, within our on through happening deliver in discretionary controllables. macro environment, confident about I focused to in our and on. the clients this macro we're environment. our in And that. what's

David Aufderhaar

help little to as a had. will you that bit into think the guide, answer well of some I think I And that Youssef, questions double-click the it just might and

that. a to just more around provide So color little bit

actually Matt 'XX called And key FY this we out. the build the 'XX. continue on First, into think see many closed we going to I of FY to metrics we throughout as year. out Like and in that improvements expect

one is clients asked things Active you of the for.

we to significant like in a see clients this. be I client answered active But down expect trajectory think, expect improvement But we 'XX. in 'XX. Matt, do to in clear, to just do the FY FY be

our As had you clients continue QX, FY 'XX, loss and active into FY momentum that saw we all in lowest 'XX. in sequential to of we of expect

AOV strength and in RPAC. saw We

We sort promotional been volume. continue momentum of freestyle to that the around we've see in work doing

creating things momentum going we well 'XX guide. the of in All as FY And that included in because revenue those to 'XX. of continue FY are that's all expect into

out a sequentials, row perspective a revenue second the pretty called around year-over-year guide week. that Matt is we're that sort XXX year basis points which year-over-year assumes midpoint when in for And you I standpoint. improvement guide of type of year-over-year And an if you almost that's adjust of think the from of improvement XXrd from look showing the the at our important that a of

it to important also also year. throughout the that assumes note improvement It's

us think the look the really guide important in guide, I towards growth at year And FY trajectory If 'XX. well. assumes full move that our it midpoint sort those improvement are of throughout versus that also points the of you QX as year

And I have P&L. the sort on really driving that think of leverage track in and identifying savings side, cost of record proven the we expense

'XX. we remarks spend think I over SG&A in of his P&L out $XXX it from in the earlier million called Matt that FY removed

annualized that there. 'XX some actually of of savings that the into savings drove additional initiatives have would and sort go drive And FY that

that we earlier The of teams, styling our other of that's SG&A XX% that out 'XX expect actually XX% landed to important our sort the really that, thing ranges that and call continue contribution we as talked service and well. and around about on is labor our and around was talk variable historical above customer spend QX, in And used FY leverage our is remarks to ops teams, we we part our in teams, to margin. between actually

And we're growth, the that's what and created continue the last really, about focused which long-term really growth is on. as financial that we're quarters, we've Matt that success healthy clients, do strong that sustainable to we'll and describing, in returning if that we you build position, being what throughout return methodical to allows our to really And to few on was us over approach with year. think

we us quarter-over-quarter did that also of by confidence projection make to during returning expect well. the that that's FY And to what 'XX as 'XX. in gives out longer-term And also active a have revenue that end we we call growth the of clients FY increase

Operator

Siegel question from the Markets. of next Our comes BMO line of Capital Simeon

Unknown Analyst

others, [ any new is Simeon. curious it is mix you just mentioned on brands you for ] level Since today. was versus type some private want of This Dan now I target extending brand launching and private maybe where that

Matt Baer

appreciate I the question. yes, Dan,

calls, prior critical we clients, of financials As spoke both profit our also terms of on a strong in just private role but for us, brands really the to. that contribution terms our and in shared David how play serve we've

X% are product private and keep today. impressively, brands brands. IMU our as us, to is XX% XX% to make a effectively both clients our vote tell private our mix roughly well, have market about national than of about continue Our rate And also higher up our for higher brands.

our as or client identify serve is states that currently within portfolio client aren't where we've need continue brand private with to aren't working meeting meeting do well we What spaces we to been our otherwise or private brand white as could can to we portfolio. needs

brands: brand And for we're brands The brands terms portfolio or new private more space to to our a of in attire also, And capture do where think going And exactly private that. I into both Post them and new meet Commons. help our identify additional private within They either X opportunities at we're business. current white there of launch Montgomery men's the mentioned it. to launch just to women's we modern And our expand business elevated assortment of and clients. continue our for

that brands In it going lot needs But the makeup terms make and continue outsized brands. just important scale to possible. client decisions. most client to and drive into confidence it market from during us of also of to But what a towards work have onboarding. and sense brands, both private something we've going terms those wouldn't helps an us for lean a private where in clients, success perspective. It national to is we'll ultimate we're also purchasing national our a a role their right. long-term continue We're serve an then between to with conversion also in market lot national had of mix view wherever client brands, certain of of brands continue is of play and those helps

Unknown Analyst

there's Got assumed could If anything takes it. guess, XX% the of I to you if the to terms and what or appreciate in gross the guide. color. I could or XX% end. higher the lower you within share margin the on I that puts gets year, for

David Aufderhaar

margins. And said last to of this was being over really about to a really the in really, sure QX us quarter the the question. example within And Yes. the of gross we've couple we're couple at that. I gross driving progress that opportunity of really think The gives that make range thing those for great up the we've we're being Thanks quarters that of good to encouraged with last probably opportunistic the last XX%, ranges. margin where made that XX% years on

around but into that in we leaned guided opportunity we slightly to to to the little a think that. XX% for ways the our saw came more an quarter. really in I that's engage below quarter, and because clients for XX% dynamic promotions bit And

range I within probably And around with what that's we just as the contribution one comfortable feel margins and so to be increased that contribution is think the puts why margin And because when those opportunities. us gross driving able I just described reason see of room well to and takes because margins, that margin. move bigger the within gives in leverage we gross that we're that of

Operator

from Dana question Advisory Telsey comes next Telsey Our of line of the Group.

Dana Telsey

and and can As about the that you've you reductions active had, going it in the how base, talk change client you're seeing what about forward? you who is think clients think today, about client the you

revenue improving, going given And environment talked of are you current you dynamics? active how the customer hurt? net with in thinking those or the per forward? promotional are that label of does private you kind how How what the And help is quarter about about thinking with the

Matt Baer

I'll the them Dana, questions I one, by correctly. if got address one

client first that around is we're who our The current is serving.

environment. around the is is client. And The influencing active second the ultimately, promotional our then third then per revenue that's how

Dana Telsey

Correct.

Matt Baer

conviction is believe of that service all consumers meet I If can talked apparel needs excellent. is go I that the and one level nearly we've we client terms before, accessories an of with Okay, the about back standpoint. to of our in that from provide who today, this I'll start U.S. and just high a

which is one an to it today. them serving that is the well. the is comfort emphasis focus to a finding to uniquely competitive fits our service offerings. clients. retail gets The challenge product just values in serve terms recommendations our with human differentiator is consumer's one of home do personalized our and with struggles that is a styles, is well clients And right appreciates that the at puts guidance and finding inspiration really That in that a client that stylist to a we're what when outfitting. critical again ease that apparel Where also us That critical moment other is on as the for we're comes is convenience their able client over and for really where client it

sure number make done is X The what vast. so clear value we're quite though that when as consumer make the the serving segments we as is. is ensure last to market, of and we to we're that over proposition And possible the that clients go year or to segmented we work that that we've it specific talk that can

teachers, promotions which for building we'll order in messaging professions going is segment also with we're certain new that working And earlier, of segments, our deepen over-index across we or we that Fix for different with, mentioned did I environment. terms experiences and consumer to multiple into continue a out consumer tailored example forward. them. great lean where one clients What building that of the We're engagement of is in bring and the drive Stitch to and into what

the of In that progress positioned we tech CRM our versus improved. where feel business. of the we we we've well stack as environment where Where are our terms well really in over the year our capabilities last promotional we're a are were marketing today, the capabilities made the of significantly ago, as foundation strengthen year given today to

personalized ability We have send to significantly more our individual tailored CRM. tailored and SMS and push clients. to that are improved notifications We've

promotions we dollars going we're that are those greatest with ones better have so providing can And equipped level make individual the judicious client promotions to the incrementality only sure the that our it's to the to us. for that when we're impact also providing going that at margin that are and we are drive ensure

in time. XX%. wallet we're already, is of spoken also to driving revenue times believe we've I up drive per over again, gives ability to that now contribution a client of the invest That that us really our to strong ours active north the advantage profitably profits that a and few competitive increase share promotions,

we're that for is For up revenue be really something us encouraged active by. to client per X%

lean have forward. even going believe opportunity that also to we further in We something it's significant

year I clients of person in our them and over why eager accessories. with is wallet flexibility us. are can so to I've X,XXX, And our average so them of that's many time. capture most speak that spend when talk of with so important and in the the it's needs Our with that And interesting of share Fix in business over more more meet more done upwards continue with all in to is apparel one meet model things the work client to and $X,XXX spending a their of frequently to more we

drive lifetime to that use client and ultimately going to of our part big profitable are engagement forward ensure ones judiciously up per increased a that active for to that So value drive us. yielding are promotions strategy revenue those and to is promotions

David Aufderhaar

that Dana, And RPC -- how approach we are up RPAC about clients that of point into methodical clients that And bringing the bringing clients number. so row And last the client RPAC we're sure why area year-over-year is of about is long-term in see think I LTV. we've that making driving areas and And the that's new more about the we our cohorts. of on standpoint. are being healthy XX-day reasons for one new truly that a a talked those because we're is the up in why And an is second from that and RPAC to one quarter couple new XX-day data we're quarters that experience the talked that's that continue strength.

Operator

question next Our Bernstein. Alliance Sherman Aneesha comes the from of line of

Aneesha Sherman

similar-sized XXXX, $X you active So but XXXX, look million, the years where had I $X.X profile stronger. a margin million base client ago lot X, a in back about to if about of the to was was X of business kind

X% margin. about adjusted You EBITDA were doing X%,

cost and how talk sized customer then on business about kind you back cost you Like base from similar evolved? the that now X algo? has if base Or X, changed revenue prevent the compare margin that getting similar to base, could kind a of years what the of the sized back last that the have that are base Can you versus profile? things get to over

David Aufderhaar

investing driving that returning that is much leveraging this think that FY in our transforming at savings guess to sure big more and it's want describing going now, of in P&L we in make our growth. with a what balancing about make cost where are business. when I Matt I path be are We in to And sure that good to to one of Yes, was question. turnaround reasons we and profile 'XX, we that. see of Aneesha, important to we're a we to it's the that especially time careful because a growth, want back balancing

point, at sure over in make of last sort years we're also now. the great a work reinvest we're looking growth. to balance so the P&L driving of that lot is that's into And to leverage the areas And that the driving P&L. done, right that and we've to the focus think I towards your few of But leverage where

Aneesha Sherman

referrals now the And part work a client Is you talking -- to paying seems of that for a you a off you from were then adverse you more that I seeing there advertising selection have some your the of ago whether I follow-up. wonder of new I that. success strategy was off David, couple it? quick And sense. about in all increase makes closer and is into pockets know certain that you know That look acquisition. in out mentioned backed be years a and of strategy are as with I teachers referral you. as consumers, maybe spend?

David Aufderhaar

Yes.

little the the active are that over referral but being highlight think, think around a around focused, is a we I point, things that now. area us, I'd expect strategy, Like, also reactivation Matt's into up what right very continue area it's a I strength some on couple is we past 'XX. of to where we're more teacher and reactivation. in bit that's to been for both big Referrals think strength and as fiscal year-over-year focus X into certain customer maybe a FY well. the area to of just But segmentation, of years, continue than clients. on I we're is leaning one, And seeing

active it perspective, line double approximately said the that know them as I to I check. a in on year, I revenue full of a the think you from of big double where just about Like we think side in comps clients, if think we area, clients down, out, comps. but be well. to think to the Matt about expect but into actually is part called with for when -- And be you I improvement dormancy expect our sort clicking guide this active other trend

really making giving talked sure our ways, existing around it's dynamic All of about couple with that the more valuable. do them, quarters license we we're engaging engage sure we've that last making over and in of them when that the things making new sure and that clients we're

truly we Those I that ship talked make are think see to every last possible and are interaction. we all Fix auto and things management of made to listening license be to the experience quarter, we our changes talking the Quick that quarter. to adjustments the giving and about our sure at this experience about value them clients as as flexible with sort

into a sort earlier, we're that, us that's those FY And improvement into during a why where big continue I FY what increase that's that of had path of a are to X of 'XX. those called out seeing will 'XX. of which because 'XX components quarter-over-quarter -- FY going is big And the as trends provides and

Operator

next line of question Maria Ripps the comes from Our Canaccord. of

Maria Ripps

talk with of in Two associated questions, think X we inventory please. Can How accomplish about sort any about costs you investments additional including any up please to items one additional shipment? to should needed this?

Matt Baer

service to the to we we us remarks Matt. Maria, we're our greatest it's able time. out benefit it flexibility right how for new business excited providing benefit be serve ways a or and our the that is new question. this and for, clients. approaching that's the one going for better that that them We're and as our and I clients that going do shared the into ensuring it's been feature it's for to for few in it I be And at prepared model are different the what building things to of we're appreciate the in clients, most roll for the the

the our for keep seen economics our of higher We'll we've feature really traditional order it, is what to monitor when that's have testing ultimately rates up in it continue experience that select this better us. is and something but in to Fix forward, all that clients launch of that wide into important. they going And led than

So transactions, it's the rates that of self-selecting X also that revenue well but than higher for fixes because it's these seeing are with we're more just generating items. not an the increase improve keep as through these into profitability clients

Maria Ripps

wanted up your Got follow sense. it. on That to then I makes just And expenses.

of 'XX implies guidance So decline of in year-over-year. your terms further fiscal in sort expenses

it's little your XXXX, so maybe fiscal revenue like. we expense a And the year, XXXX? be look towards decline you think it expect further for looks going in sounds like year we about of full sort sort base bit So another to of would how should that margin as to year? it But of decline

David Aufderhaar

think Maria, in FY 'XX, I you're right.

definitely assumes savings. it I think additional in guide, the

out million there. $XXX just this of I think called that savings the year. couple I we is had a areas One,

halfway through partially Some year. started of initiatives those were -- only they the

FY year it, it full annualization And you so the into about think going 'XX, if gets savings. those of

of had an that part that's warehouse the so talked of know we I annualization And consolidation. standpoint. part That's that. savings from about

that And big then the above we leverage savings other is about of being components are labor big thing FY sort that 'XX. the X in Those the variable XX%. of talked to

investments in able grow to just very good Matt I we're that what areas thing in FY like as is by line make methodical very by is top sure being our we just the business. being to in 'XX, that we're sure the be of want the in that 'XX, what like want to we said, And return have and to the that make we're think on still we investments encouraged that FY we're But growth, will targeted economics. I doing unit excited that

so we And growth, to be we'll return to able leverage. to as drive continue

Operator

William question next of the Dylan Our line from of Carden comes Blair.

Alexander Vasti

Vasti This on is Alex Dylan. for

bit Firstly, spend the holiday talk throughout of and season of the maybe Maybe heading on fiscal prior into a a just could advertising one expectations follow-up the just rest if your about 'XX. of questions. you for

client elevated cohorts spend, judicious very in the marketing mentioned You with being specific targeting broader on especially, previously the that going advertising spend given you're industry.

And via just it, towards to get update on on the new for to year. bias viewing any plan spend color that? or on an love Anything would existing you're you I maybe spend advertising how customers? how

Matt Baer

and speak some question. bit, can it appreciate additional with I'll up little the I a Alex, then follow to color. David

more the targeted, said I much enabled That's what just segmented foundation, year. capabilities us earlier, more in that much the to of in the our be done to to we back terms too, work go terms marketing that that we've over seen strengthen Along the I'll course QX the go acquisition to of first drive costs with with to advertising our lines, our productivity. those It's our media in customer in time a declined. in we've of market budget how while. order actually increased budget, improve

about trend, enables It's of we've conversion, and stabilized to us have get on conversion calls, where today. a over back prior talked comfortable terms to time. which growth where we conversion where it we're that is feel in forecasted is with And and

of in our of overall good budget it. effectiveness feel advertising So pretty terms and the

Walmart out service there period We're having a about We in investment. the that's or part, marketplace Macy's In ability very and of a for likes retail conversion. to win of more keywords, a on to during experience bidding offer is those our with compete good media crowded the order in to the we at impressions compete or Amazon traditional not same example, or that due tactical differentiation inflated that a also win the feel to of or really level.

And into them clearly into with needs. right the about potential continue explains unique proposition expectations, segment so message a the landing good have best and feel that clients and brings tailor and our very then content of to brings right And well to experience we well the speak value their as can as aligns the with really business. audiences we experience how how that meet we creative the that

deployed our our too, important that's talking hit to how client when to you're clients. budget advertising acquisition be about else Something current would engaging relative on, new versus

course the the In acquire often every is a for having having awesome is business client, are ones. to over traditional retailer model that things just client's a organic lifetime. all future environment, but of subsequent transactions not One almost a pay we've once our to pay to transaction of acquired client about retail a that

of the up the comment, we have such of we advantages Fix for why once we continue those us, as well client one into we purchases. For growth. have of for in the profitability return to the It's reasons to signed confidence Fix model. one It's future to the unique and experience. don't bring subsequent a Fix Stitch they've our ecosystem, once business pay

anything So there's want additional add? to David, you'd that if

David Aufderhaar

think I I always with I opportunistic sort of X% Yes, an to voiced that. points. couple with think we've revenue just to of think guided spend data advertising I But be perspective. We'll a we of X% that. from mean, over

quarter-to-quarter number, so can standpoint, a And from that vary.

that And really it's in. we're we've we'll sake. create opportunity make sure driving just that when for And of cost driving that us all because in when opportunity, the initiatives done and that do in leverage our P&L, see to we what and allows methodical we that approach growth's just savings it more client are about leaning to healthy not growth growth lean

well us that use so and as approach we've transformation very continue served gone through of to approach. has that And this sort we'll

Alexander Vasti

And then just on one quick one a modeling, little clarification.

at result rationalization came So fiscal you for about a $XXX that the of your million SG&A over savings 'XX. phase as talked

forward. savings you if these on could give going a more bit wondering color Just

good run You to you'll wondering question mentioned of rate others. overall going rate you you full be could that response that 'XX, the going give a if SG&A to expect savings some land in also run on if $XXX color and I'm a these is just then million a are number a forward getting forward? savings annualization fiscal where in one prior of more bit that

David Aufderhaar

Yes.

back I think you could that, into Alex.

the really, that midpoint gross think just remaining to XX% the SG&A of the would spend. the And the you we of midpoint, about of guide, sort be then XX.X%, our If to XX% guided is which below margin. part

that always big the across is save of of also quarter. But items. a looking line leverage back could So make that those it part SG&A in sure you driving at to we to assumption into ways are

Operator

the UBS. Our from Instructions] of Sole comes question next line [Operator of Jay

Mauricio Serna Vega

clients top Serna This So are in were August based active so Jay just for in in also of wondering are so far trending Mauricio to do of things where in dialing trending September, far, August things September Sole. come and line in? you just right? We kind how on and expect how is terms and

David Aufderhaar

tend is. the And where instead a tend we standpoint, we better now, client quarter-over-quarter but to quarters. active clients. trending quarter be active right the of Right an that. are about we quarter-over-quarter do things year-over-year. couple talk When for quarterly guidance Thanks standpoint, definitely down, our to from clients, of active From talk within expect about to last we talk than

then where If about we were X%. been, we've were you we at at think X%,

shape, into our active from QX, on everything guide. probably size revenue within Going above included quarter-over-quarter client then standpoint. a side, little rough bit -- is an down and And X% from the

Mauricio Serna Vega

follow And it. Got up. just to it. Got

adjustments? to are a if or there So additional any planning continues, downturn you the macro is macro downturn make

David Aufderhaar

margin really I leverage standpoint, to when think a P&L. about our of in I have that is we have variable. margin Yes. in all I identify cost proven gross also we and track from we've think the you being a contribution -- able that created labor in savings think variable record mean

And gives headwind down. goes ability us if able be a that also so we see to the to that reduce did when volume expenses

I so And comfortable really feel we think that in a place. we're good

Operator

questions I the the that, today's participation you With program. your conclude further queue. This in in conference. for see no Thank does

disconnect. all day. may a Have You great

Stitch Fix (SFIX) 24 Sep 242024 Q4 Earnings call transcript