Stitch Fix Inc.

06/11/2026 | Press release | Distributed by Public on 06/11/2026 14:09

Quarterly Report for Quarter Ending May 2, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together with "Special Note Regarding Forward-Looking Statements", "Risk Factors" included under Part II, Item 1A, and our unaudited condensed consolidated financial statements and related notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and related notes included in Part II, Item 8 of our Annual Report on Form 10-K (the "2025 Annual Report") for the fiscal year ended August 2, 2025, filed with the Securities and Exchange Commission on September 25, 2025.
We use a 52- or 53-week fiscal year, with our fiscal year ending on the Saturday that is closest to July 31 of that year. The fiscal year ending August 1, 2026 ("fiscal 2026") and August 2, 2025 ("fiscal 2025") each consist of 52 weeks. Throughout this Quarterly Report, all references to quarters and years are to our fiscal quarters and fiscal years unless otherwise noted.
BUSINESS OVERVIEW
In 2011, Stitch Fix introduced an innovative approach to shopping for clothing and accessories. We were inspired by the opportunity to create a client-first styling experience, offering an alternative to impersonal, time-consuming and inconvenient traditional shopping. We do this through our unique business model that pairs expert Stylists with best-in-class artificial intelligence ("AI") and recommendation algorithms. It is this combination that enables us to help people discover the styles they will love without having to spend hours browsing stores or sifting through endless choices online.
Clients primarily engage with us by (1) receiving a curated shipment of items informed by our algorithms and chosen by a Stitch Fix Stylist (a "Fix"); or (2) purchasing directly from our website or mobile app based on an individualized assortment of outfit and item recommendations ("Freestyle"). For the Fix experience, clients choose to schedule regular shipments or order a Fix on demand. Then, after receiving a Fix, they can purchase the items they want to keep and return the other items, if any.
Since our inception, Stitch Fix has been powered by data science, and we continue to enhance these capabilities. Our rich data set and our proprietary algorithms fuel our business by enhancing the client experience and driving business model efficiencies. For example, we currently leverage AI and data science to match our Stylists to our clients and aid our Stylists in creating Fixes, help inform merchandise buying and inventory placement in our network, and optimize our approach to pricing and markdowns. Our large and growing data set provides the foundation for our proprietary algorithms. The vast majority of our client data is directly shared by the client, rather than inferred, scraped, or obtained from other sources. We also gather extensive trend data as well as merchandise data, such as inseam, pocket shape, silhouette, and fit. We believe that both the data we have, as well as our algorithms, give us a significant competitive advantage. As our data set has grown, our algorithms have become more powerful, and we expect that to continue.
We offer a wide selection of apparel, shoes, and accessories for Women's, Men's, Kids, Petite, Maternity, and Plus categories. To ensure every client can find items they love, we curate merchandise across multiple price points and styles from established brand partners as well as our Owned Private Label Brands, which are created to serve unmet client needs. Our algorithms filter through this broad assortment to recommend a relevant subset of items to our Stylists or clients, who leverage these insights to select or purchase merchandise.
DISCONTINUED OPERATIONS
During the first quarter of fiscal 2024, we ceased operations of our UK business and the accounting requirements for reporting the UK business as a discontinued operation were met. Accordingly, any discussion of historical information in Management's Discussion and Analysis below reflects the results of the UK business as a discontinued operation, and amounts and disclosures below relate to the Company's continuing operations for all periods presented, unless otherwise noted. Refer to Note 12, "Discontinued Operations" within the Notes to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report for further details.
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FINANCIAL OVERVIEW
For the three months and nine months ended May 2, 2026, we reported revenue, net of $340.3 million and $1,023.7 million, respectively, representing a year-over-year increase of 4.7% and 7.1%, respectively, compared to the same period in the prior year. As of May 2, 2026, and May 3, 2025, we had approximately 2,309,000 and 2,353,000 active clients, respectively, representing a year-over-year decrease of 1.9%.
During the nine months ended May 2, 2026, we experienced an increase in net revenue year-over-year primarily due to an increase in net revenue per active client, driven by higher average order values and number of items kept per Fix, partially offset by a decline in active clients due to our challenges in acquiring and retaining active clients. Throughout the remainder of fiscal 2026, we expect broader macroeconomic uncertainty and market conditions to negatively impact consumer discretionary spending. However, we project that positive trends in average order values and the number of items kept per Fix will offset any negative impact of lower active client counts on net revenue in the remainder of fiscal 2026. We remain focused on retaining current clients, attracting new clients, improving the conversion of new visitors to our site and app, and enhancing our overall client experience for new and existing clients. Refer to the section titled "Key Financial and Operating Metrics" for information on how we define and calculate active clients.
Net loss from continuing operations for the three months and nine months ended May 2, 2026, was $1.5 million and $10.5 million, respectively, compared to a net loss from continuing operations of $7.4 million and $20.3 million for the same periods in the prior year.
For more information on the components of net loss from continuing operations for three months and nine months ended, refer to the section titled "Results of Operations" below.
KEY FINANCIAL AND OPERATING METRICS
NON-GAAP FINANCIAL MEASURES
We report our financial results in accordance with generally accepted accounting principles in the United States ("GAAP"). However, management believes that certain non-GAAP financial measures provide users of our financial information with additional useful information in evaluating our performance. We believe that adjusted EBITDA from continuing operations ("Adjusted EBITDA") is frequently used by investors and securities analysts in their evaluations of companies, and that this supplemental measure facilitates comparisons between continuing operations of companies. We believe free cash flow from continuing operations ("Free Cash Flow") is an important metric because it represents a measure of how much cash from continuing operations we have available for discretionary and non-discretionary items after the deduction of capital expenditures. These non-GAAP financial measures may be different than similarly titled measures used by other companies.
Our non-GAAP financial measures should not be considered in isolation from, or as substitutes for, financial information prepared in accordance with GAAP. There are several limitations related to the use of our non-GAAP financial measures as compared to the closest comparable GAAP measures. Some of these limitations include:
•Adjusted EBITDA excludes interest income and other (income) expense, net as these items are not components of the core business;
•Adjusted EBITDA does not reflect provision for income taxes, which may increase or decrease cash available;
•Adjusted EBITDA excludes the recurring, non-cash expenses of depreciation and amortization of property and equipment and, although these are non-cash expenses, the assets being depreciated and amortized may have to be replaced in the future;
•Adjusted EBITDA excludes the non-cash expense of stock-based compensation, which has been, and will continue to be for the foreseeable future, an important part of how the Company attracts and retains employees and a significant recurring expense in its business;
•Adjusted EBITDA excludes costs incurred related to discrete restructuring plans and other one-time costs attributable to continuing operations that are fundamentally different in strategic nature and frequency from ongoing initiatives. The Company believes exclusion of these items facilitates a more consistent comparison of operating performance over time, however these costs do include cash outflows;
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•Adjusted EBITDA excludes non-ordinary course legal fees for specific proceedings that the Company has determined arise outside of the ordinary course of business and are nonrecurring, infrequent, or unusual; and
•Free Cash Flow does not represent the total residual cash flow available for discretionary purposes and does not reflect future contractual commitments.
Adjusted EBITDA
We define Adjusted EBITDA as net loss from continuing operations excluding interest income, other (income) expense, net, provision for income taxes, depreciation and amortization, stock-based compensation expense, restructuring and other one-time costs, and non-ordinary course legal fees related to our continuing operations. The following table presents a reconciliation of net loss from continuing operations, the most comparable GAAP financial measure, to Adjusted EBITDA, for each of the periods presented:
For the Three Months Ended For the Nine Months Ended
(in thousands) May 2, 2026 May 3, 2025 May 2, 2026 May 3, 2025
Net loss from continuing operations $ (1,525) $ (7,381) $ (10,541) $ (20,267)
Add (deduct):
Interest income (2,123) (2,627) (6,661) (8,222)
Other (income) expense, net (438) 59 (323) 210
Provision for income taxes 70 241 194 580
Depreciation and amortization 6,116 6,860 18,662 21,360
Stock-based compensation expense 11,139 13,727 37,040 43,658
Restructuring and other one-time costs (1)
- 134 - 3,107
Non-ordinary course legal fees (2)
- - 4,223 -
Adjusted EBITDA $ 13,239 $ 11,013 $ 42,594 $ 40,426
(1) For the three months and nine months ended May 3, 2025, restructuring charges were $0.0 million and $1.2 million, respectively, primarily in severance and employee-related benefits and other restructuring costs; and other one-time costs were $0.1 million and $1.9 million, respectively, in one-time bonuses for certain continuing employees.
(2) Non-ordinary course legal fees for the nine months ended May 2, 2026, include costs related to a specific class action lawsuit.
Free Cash Flow
We define Free Cash Flow as cash flows provided by operating activities from continuing operations, reduced by purchases of property and equipment that are included in cash flows from investing activities from continuing operations. The following table presents a reconciliation of net cash flows used in operating activities from continuing operations, the most comparable GAAP financial measure, to Free Cash Flow for each of the periods presented:
For the Nine Months Ended
(in thousands) May 2, 2026 May 3, 2025
Free Cash Flow reconciliation:
Net cash provided by operating activities from continuing operations $ 30,009 $ 18,572
Deduct:
Purchases of property and equipment (14,564) (12,065)
Free Cash Flow $ 15,445 $ 6,507
Net cash used in investing activities from continuing operations
$ (27,068) $ (59,689)
Net cash used in financing activities from continuing operations $ (29,557) $ (12,432)
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OPERATING METRICS
May 2, 2026 January 31, 2026 November 1, 2025 August 2, 2025 May 3, 2025
Active clients (in thousands)
2,309 2,288 2,307 2,309 2,353
Net revenue per active client
$ 578 $ 577 $ 559 $ 549 $ 542
Active Clients
We believe that the number of active clients is a key indicator of the overall health of our business. We define an active client as a client who checked out a Fix or was shipped an item via Freestyle in the preceding 52 weeks, measured as of the last day of that period. Clients check out a Fix when they indicate what items they are keeping through our mobile application or on our website. We consider each Women's, Men's, or Kids account as a client, even if they share the same household. A single person could have multiple accounts and count as multiple active clients. We had approximately 2,309,000 and 2,353,000 active clients as of May 2, 2026, and May 3, 2025, respectively, representing a year-over-year decrease of 1.9%. The decrease in active clients is due to inactive clients outpacing client additions during the year, which we largely attribute to client conversion and retention challenges.
Net Revenue per Active Client
We believe that net revenue per active client is an indicator of client engagement and satisfaction. We calculate net revenue per active client based on net revenue over the preceding four fiscal quarters divided by the number of active clients measured as of the last day of the period. Net revenue per active client was $578 and $542 as of May 2, 2026, and May 3, 2025, respectively, or a year-over-year increase of 6.6%.
FACTORS AFFECTING OUR PERFORMANCE
MACROECONOMIC ENVIRONMENT
Our business and operating results are subject to national and global economic conditions and their impact on consumer discretionary spending. As the macroeconomic environment is experiencing inflation, recessionary concerns, and general uncertainty regarding trade policies, including tariffs and other restrictions, and the overall future political and economic environment, we cannot predict whether or when such circumstances may improve or worsen. We do not believe these conditions have materially impacted our net revenues or client behavior during the first nine months of fiscal 2026. We anticipate that macroeconomic uncertainty will continue to place pressure on consumer discretionary spending, which may negatively impact our business in the remainder of fiscal 2026.
INVENTORY MANAGEMENT
We leverage our data science to buy and manage our inventory, including merchandise assortment and fulfillment center optimization. Because our merchandise assortment directly correlates to client success, we may at times optimize our inventory to prioritize long-term client success over short-term gross margin impact. To ensure sufficient availability of merchandise, we generally enter into purchase orders well in advance and frequently before apparel trends are confirmed by client purchases. As a result, we are vulnerable to demand and pricing shifts, including due to tariffs, and availability of merchandise at the time of purchase. We incur inventory write-offs and changes in inventory reserves that impact our gross margins. Moreover, our inventory investments will fluctuate with the needs of our business.
CLIENT ACQUISITION AND ENGAGEMENT
To grow our business, we must continue to acquire clients and successfully engage and retain them. Our marketing strategy aims to preserve liquidity and achieve profitability, while simultaneously attracting long-term clients to fuel a return to growth. We utilize both digital and offline channels to attract new visitors to our website or mobile app and subsequently convert them into clients. Our marketing costs are largely composed of advertising, client referrals, and public relations expenses. At any given time, our advertising efforts may include social media marketing, keyword search campaigns, affiliate programs, partnerships, campaigns with celebrities and influencers, display advertising, television, radio, video, content, direct mail, email, mobile "push" communications, SMS, and search engine optimization. Our marketing expenses have varied from period to period and we expect this trend to continue.
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Marketing expense is recorded in selling, general, and administrative expenses in the unaudited condensed consolidated statements of operations and comprehensive loss. The largest component of our marketing expense is advertising, which for the three and nine months ended May 2, 2026, was $34.9 million and $97.7 million, respectively, and for the three and nine months ended May 3, 2025, was $33.2 million and $87.7 million, respectively. We will continue to be methodical about our approach when we are making advertising decisions, and may adjust our spending up or down based on performance.
OPERATIONS AND INFRASTRUCTURE
We intend to leverage our data science and deep understanding of our clients' needs to make targeted investments in technology and product, including continued integration of AI into internal business processes and client facing experiences.
MERCHANDISE MIX
We offer apparel, shoes, and accessories across categories, brands, product types, and price points. We currently serve our clients in the following categories: Women's, Petite, Maternity, Men's, Plus, and Kids. We carry a mix of third-party branded merchandise, including premium brands, and our own Owned Private Label Brands. We also offer a wide variety of product types, including denim, dresses, blouses, skirts, shoes, jewelry, and handbags. We sell merchandise across a broad range of price points and may further broaden our price point offerings in the future.
Historically, changes in our merchandise mix have not caused significant fluctuations in our gross margin; however, categories, brands, product types, and price points do have a range of margin profiles. For example, our Owned Private Label Brands have generally contributed higher margins than our third-party brands, which have generally contributed lower margins. We continue to evolve our merchandise mix to improve the client experience and attract new active clients. Shifts in merchandise mix will result in fluctuations in our gross margin from period to period.
COMPONENTS OF RESULTS OF OPERATIONS
REVENUE
We generate revenue from the sale of merchandise through our Fix and Freestyle offerings. With our Fix offering, we charge a nonrefundable upfront fee, referred to as a "styling fee," that is credited towards any merchandise purchased. We offer Style Pass to provide select U.S. clients with an alternative to paying a styling fee per Fix. Style Pass clients pay a nonrefundable annual fee for unlimited styling that is credited towards merchandise purchases. We deduct discounts, sales tax, and estimated refunds to arrive at net revenue, which we refer to as revenue throughout this Quarterly Report. We also recognize revenue resulting from estimated breakage income on gift cards.
COST OF GOODS SOLD
Cost of goods sold consists of the costs of merchandise, expenses for inbound freight and shipping to and from clients, inventory write-offs and changes in our inventory reserve, payment processing fees, and packaging materials costs, offset by the recoverable cost of merchandise estimated to be returned. To date, tariffs have not materially impacted our cost of goods sold. However, our cost of goods sold has increased in fiscal 2026 and may continue to increase driven primarily by rising transportation cost and investments in our inventory assortment. We also expect fluctuations in our cost of goods sold as a percentage of revenue primarily due to how we manage our inventory and merchandise mix. Our classification of cost of goods sold may vary from other companies in our industry and may not be comparable.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
Selling, general, and administrative expenses ("SG&A") consist primarily of compensation and benefits costs, including stock-based compensation expense, for our employees including our Stylists, fulfillment center operations, data analytics, merchandising, engineering, marketing, client experience, and corporate personnel. SG&A also includes marketing and advertising costs, third-party logistics costs, facility costs for our fulfillment centers and office, professional service fees, information technology costs, and depreciation and amortization expense. As a result of our restructuring and cost reduction actions from fiscal year ended July 30, 2022 ("fiscal 2022") through fiscal 2025, we expect SG&A as a percentage of revenue in fiscal 2026 to continue to decrease as compared to
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fiscal 2025. Our classification of certain components within SG&A may vary from other companies in our industry and may not be comparable.
INTEREST INCOME
Interest income is generated from our cash, cash equivalents, and investments in available-for-sale securities.
PROVISION FOR INCOME TAXES
Our provision for income taxes from continuing operations consists of an estimate of federal and state income taxes based on enacted federal and state tax rates, as adjusted for allowable credits, deductions, uncertain tax positions, and changes in the valuation of our net federal and state deferred tax assets.
RESULTS OF OPERATIONS
The following table summarizes our financial results from continuing operations:
For the Three Months Ended % For the Nine Months Ended %
(in thousands) May 2, 2026 May 3, 2025 Change May 2, 2026 May 3, 2025 Change
Revenue, net $ 340,277 $ 325,016 4.7 % $ 1,023,701 $ 955,944 7.1 %
Cost of goods sold 191,439 181,458 5.5 % 576,594 528,720 9.1 %
Gross profit 148,838 143,558 3.7 % 447,107 427,224 4.7 %
Selling, general, and administrative expenses 152,854 153,266 (0.3) % 464,438 454,923 2.1 %
Operating loss (4,016) (9,708) (58.6) % (17,331) (27,699) (37.4) %
Interest income 2,123 2,627 (19.2) % 6,661 8,222 (19.0) %
Other income (expense), net 438 (59) (842.4) % 323 (210) (253.8) %
Loss before income taxes (1,455) (7,140) (79.6) % (10,347) (19,687) (47.4) %
Provision for income taxes 70 241 (71.0) % 194 580 (66.6) %
Net loss from continuing operations $ (1,525) $ (7,381) (79.3) % $ (10,541) $ (20,267) (48.0) %
The components of our results from continuing operations as a percentage of revenue were as follows:
For the Three Months Ended For the Fiscal Year Ended
May 2, 2026 May 3, 2025 May 2, 2026 May 3, 2025
Revenue, net 100.0 % 100.0 % 100.0 % 100.0 %
Cost of goods sold 56.3 % 55.8 % 56.3 % 55.3 %
Gross margin 43.7 % 44.2 % 43.7 % 44.7 %
Selling, general, and administrative expenses 44.9 % 47.2 % 45.4 % 47.6 %
Operating loss (1.2) % (3.0) % (1.7) % (2.9) %
Interest income 0.6 % 0.8 % 0.7 % 0.9 %
Other income (expense), net 0.1 % - % - % - %
Loss before income taxes (0.4) % (2.2) % (1.0) % (2.1) %
Provision for income taxes - % 0.1 % - % 0.1 %
Net loss from continuing operations (0.4) % (2.3) % (1.0) % (2.1) %
Note: Due to rounding, percentages in this table may not sum to totals.
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REVENUE AND GROSS MARGIN
Revenue increased by $15.3 million and $67.8 million, or 4.7% and 7.1%, respectively, during the three months and nine months ended May 2, 2026 compared to the same periods in the prior year. The increase in revenue was primarily attributable to an improvement in net revenue per active client of 6.6% year over year, which was primarily driven by higher average order values with the number of items kept by our clients per Fix increasing, and higher average unit retail prices. Partially offsetting the net revenue per active client increase was 1.9% decrease in active clients from May 3, 2025, to May 2, 2026.
Gross margin for the three and nine months ended May 2, 2026, decreased by 50 and 100 basis points, respectively, compared to the same periods in the prior year. The decrease for the three month period was primarily driven by higher transportation costs, partially offset by improved costs related to inventory health management. The decrease for the nine month period was primarily driven by higher transportation costs and lower product margins, partially offset by improved costs related to inventory health management.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
SG&A in the three months ended May 2, 2026, decreased by $0.4 million compared to the same period in the period year. The decrease was primarily driven by lower compensation and benefits expense and lower rent expense, partially offset by higher advertising spend. SG&A in the nine months ended May 2, 2026, increased $9.5 million compared to the same period in the prior year. The increase was primarily driven by higher advertising spend and professional fees, including $4.2 million in non-ordinary course legal fees.
SG&A as a percentage of revenue for the three months ended May 2, 2026, decreased to 44.9% compared to 47.2% for the same period in the prior year. The decrease was primarily driven by lower compensation and benefits expense as a percentage of revenue. SG&A as a percentage of revenue for the nine months ended May 2, 2026, decreased to 45.4% compared to 47.6% for the same period in the prior year. The decrease was primarily driven by lower compensation and benefits expense as a percentage of revenue.
PROVISION FOR INCOME TAXES
The following table summarizes our effective tax rate from loss from continuing operations for the periods presented:
For the Three Months Ended For the Nine Months Ended
(in thousands, except percentages) May 2, 2026 May 3, 2025 May 2, 2026 May 3, 2025
Loss from continuing operations before income taxes $ (1,455) $ (7,140) $ (10,347) $ (19,687)
Provision for income taxes 70 241 194 580
Effective tax rate (4.8) % (3.4) % (1.9) % (2.9) %
Our continuing operations are subject to income taxes in the United States. Our effective tax rate for the three and nine months ended May 2, 2026, differs from the federal statutory income tax rate primarily due to the full valuation allowance recorded on our net federal and state deferred tax assets. The tax provision for the three and nine months ended May 2, 2026, is primarily comprised of state taxes.
Our effective tax rate for the three and nine months ended May 3, 2025, differs from the federal statutory income tax rate primarily due to the full valuation allowance recorded on our net federal and state deferred tax assets. The tax provision for the three and nine months ended May 3, 2025, is primarily comprised of state taxes.
LIQUIDITY AND CAPITAL RESOURCES
SOURCES OF LIQUIDITY
Our principal sources of liquidity are our cash, cash equivalents, investments, cash flows from continuing operations, and borrowing capacity under our credit facility. As of May 2, 2026, we had $87.3 million of cash and cash equivalents attributable to continuing operations, and $142.1 million of investments.
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Credit Facility
As of May 2, 2026, we have a revolving credit facility with borrowing availability of $50.0 million, and excess availability of $33.1 million as a result of outstanding letters of credit, and no outstanding borrowing.
For information on the terms of the Credit Facility, refer to Note 5, "Credit Facility" within the Notes to unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report.
USES OF CASH
Our primary uses of cash include operating costs such as merchandise purchases, lease obligations, compensation and benefits, marketing, and other expenditures necessary to support our business. From time-to-time, we also use cash to repurchase shares of our common stock.
We believe our existing cash, cash equivalents, investment balances, and the borrowing available under our Credit Facility, if needed, will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months and beyond.
SHARE REPURCHASES
In January 2022, our Board of Directors authorized a share repurchase program to repurchase up to $150.0 million of our outstanding Class A common stock, with no expiration date (the "2022 Repurchase Program"). We may repurchase shares from time to time through open market repurchases, privately negotiated transactions, or other means, including through Rule 10b5-1 trading plans. The actual timing, number and value of shares repurchased in the future will be determined by the Company in its discretion and will depend on a number of factors, including price, trading volume, market conditions, and other general business conditions. Repurchases will be funded from our existing cash and cash equivalents or future cash flow. The repurchase program may be modified, suspended, or terminated at any time. During the three and nine months ended May 2, 2026, we repurchased an aggregate 4,519,841 shares of Class A common stock. During the three and nine months ended May 3, 2025, we made no repurchases of Class A common stock. As of May 2, 2026, we repurchased an aggregate of 6,821,982 shares of Class A common stock for $45.1 million, and had $104.9 million remained available under the 2022 Repurchase Program authorization.
CASH FLOWS
The following table summarizes our cash flows for the periods indicated below:
For the Nine Months Ended
(in thousands) May 2, 2026 May 3, 2025
Net cash provided by operating activities from continuing operations $ 30,009 $ 18,572
Net cash used in investing activities from continuing operations (27,068) (59,689)
Net cash used in financing activities from continuing operations (29,557) (12,432)
Net decrease in cash and cash equivalents $ (26,616) $ (53,549)
CASH PROVIDED BY OPERATING ACTIVITIES FROM CONTINUING OPERATIONS
During the nine months ended May 2, 2026, cash provided by operating activities from continuing operations was $30.0 million, which consisted of a net loss from continuing operations of $10.5 million, adjusted by non-cash charges of $60.5 million and change in net operating assets and liabilities of $20.0 million. The non-cash charges were primarily driven by $37.0 million of stock-based compensation expense and $17.9 million of depreciation, amortization, and accretion. The change in net operating assets and liabilities was primarily due to a $17.8 million increase in gross inventory balances due to higher inventory receipts and investment in greater assortment, partially offset by $13.3 million change in accounts payable, net of accrued liabilities due to timing of inventory receipts and payments.
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During the nine months ended May 3, 2025, cash provided by operating activities from continuing operations was $18.6 million, which consisted of a net loss from continuing operations of $20.3 million, adjusted by non-cash charges of $66.7 million and a $27.8 million change in net operating assets and liabilities. The non-cash charges were primarily driven by $43.7 million of stock-based compensation expense, $20.0 million of depreciation, amortization, and accretion. The change in net operating assets and liabilities was primarily due to a $19.5 million increase in gross inventory balances due to higher inventory receipts.
CASH USED IN INVESTING ACTIVITIES FROM CONTINUING OPERATIONS
During the nine months ended May 2, 2026, cash used in investing activities from continuing operations was $27.1 million. This was due to purchases of securities available-for-sale of $104.0 million and purchases of property and equipment of $14.6 million, partially offset by sales and maturities of available-for-sale securities of $91.5 million.
During the nine months ended May 3, 2025, cash used in investing activities from continuing operations was $59.7 million. This was primarily due to purchases of securities available-for-sale of $164.1 million and purchases of property and equipment of $12.1 million, partially offset by the sales and maturities of available-for-sale securities of $116.5 million.
CASH USED IN FINANCING ACTIVITIES FROM CONTINUING OPERATIONS
During the nine months ended May 2, 2026, cash used in financing activities from continuing operations was $29.6 million primarily due to repurchases of common stock of $15.1 million and payments for tax withholding related to vesting of share-based awards of $14.8 million.
During the nine months ended May 3, 2025, cash used in financing activities from continuing operations was $12.4 million due to payments for tax withholding related to vesting of share-based awards.
CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS
During the nine months ended May 2, 2026, there were no material changes to our contractual obligations and other commitments from those disclosed in Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2025 Annual Report on Form 10-K.
CRITICAL ACCOUNTING ESTIMATES
Our unaudited condensed consolidated financial statements have been prepared in accordance with GAAP. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses and the related disclosures. We base our estimates on historical experience and on other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.
There have been no significant changes to our critical accounting policies and estimates disclosed in our 2025 Annual Report on Form 10-K.
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Stitch Fix Inc. published this content on June 11, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on June 11, 2026 at 20:09 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]