We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Stitch Fix Rises 38% in a Year: Is the Stock Still a Buy?
Read MoreHide Full Article
Stitch Fix, Inc. (SFIX - Free Report) has experienced a remarkable jump in its share price over the past year. The stock has rallied 38.2%, significantly outpacing the Zacks Retail-Apparel and Shoes industry’s 10% decline.
The company’s enhanced operational efficiency and growth initiatives have also helped it outperform the broader Retail-Wholesale sector and the S&P 500 index’s growth of 9.1% and 4.6%, respectively, during the same period. This remarkable surge has sparked curiosity among investors, causing them to wonder whether they have already missed a profitable window or there is still room for further gains.
SFIX Stock Past-Year Performance
Image Source: Zacks Investment Research
From a valuation perspective, this leading lifestyle products retailer is currently trading at a low price-to-sales (P/S) multiple. Its forward 12-month P/S ratio is 0.31, down from the industry and the sector’s ratio of 1.28 and 1.43, respectively. This undervaluation highlights its potential for investors seeking attractive entry points. Moreover, SFIX's Value Score of B underscores its appeal as an investment option.
SFIX Looks Attractive From a Valuation Standpoint
Image Source: Zacks Investment Research
SFIX’s Client Experience Through Personalization, Innovation
Stitch Fix’s client-first approach has been driving notable improvements across key performance metrics. By expanding its assortment with trend-forward styles and fostering stronger relationships between clients and stylists, the company has seen a meaningful rise in engagement and loyalty. Customer requests for the same stylist have reached a five-year high, indicating increased trust and satisfaction. Additionally, the introduction of flexible Fix options, now allowing up to eight items per shipment, has further enriched the overall shopping experience.
These efforts have led to a consistent increase in average order value (AOV), which has grown for six consecutive quarters. In the second quarter of fiscal 2025, AOV rose 9% year over year, with a significant 16% spike on Jan. 25. This trend reflects improved alignment between clients and products, as seen through stronger keep rates and higher average unit retail. Revenue per active client increased to $537, representing a 4.3% rise from the prior year and reinforcing Stitch Fix’s position in the personalized fashion market.
Profitability also continues to strengthen. Gross margin reached 44.5% in the fiscal second quarter, reflecting an increase of 110 basis points from the prior-year level. This improvement is largely attributed to higher AOV and better product margins. We anticipate gross margin to expand 40 basis points year over year to 44.7% in fiscal 2025. Contribution margin was 33%, marking the fourth consecutive quarter above the historical range of 25-30%. Operational efficiencies across warehouse and styling teams have played a key role in this improvement, and the current cost structure is expected to remain stable.
Ongoing enhancements in personalization and inventory curation are propelling Stitch Fix’s transformation. Keep rates for new styles have increased 7% year over year, signaling a stronger product-market fit. AI-driven tools are helping the company better understand and meet client preferences. The introduction of exclusive in-house brands such as The Commons and Montgomery Post has expanded customer appeal, with the former brand emerging as a top revenue driver in the men’s category.
Stitch Fix Gains on Market Expansion & Brand Differentiation
Stitch Fix has been seeing positive momentum in revitalizing previously underperforming segments, particularly men’s and Freestyle. Both categories returned to year-over-year growth, supported by increasing demand for high-quality apparel. In the fiscal second quarter, cashmere sales grew 400% compared with the previous year period, while performance workwear sales nearly tripled. These results reflect a shift in consumer preference toward versatile, premium wardrobe staples. The resurgence of the Freestyle platform has extended Stitch Fix’s reach beyond its core subscription model, opening new pathways for customer acquisition.
The company’s focus on proprietary brand development is further strengthening its competitive positioning. New in-house brands like The Commons have quickly gained traction, emerging as one of the top revenue contributors while delivering higher margins. This private label strategy allows for improved inventory control and creates a sense of exclusivity for its customers. By blending these unique offerings with well-known national brands, Stitch Fix delivers a curated shopping experience that enhances client loyalty and sets it apart in a competitive retail landscape.
Final Thought on Stitch Fix
Investors may find Stitch Fix an attractive buying opportunity due to its ongoing business transformation, focused on personalization, operational efficiency and brand differentiation. The company is showing clear signs of improving customer engagement, expanding margins and revitalizing key segments, all while trading at a valuation that suggests room for upside. With a scalable model powered by data-driven insights and exclusive product offerings, Stitch Fix is positioning itself for sustainable growth in a highly competitive market, making the stock a compelling option for those seeking value with long-term potential. The company currently has a Zacks Rank #2 (Buy).
The Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for The Gap’s fiscal 2025 earnings and revenues indicates growth of 7.7% and 1.5%, respectively, from fiscal 2024 reported levels. GAP delivered a trailing four-quarter average earnings surprise of 77.5%.
Canada Goose is a global outerwear brand. GOOS is a designer, manufacturer, distributor and retailer of premium outerwear for men, women and children. It carries a Zacks Rank #2 at present.
The Zacks Consensus Estimate for Canada Goose’s current fiscal year’s earnings and revenues implies a decline of 1.4% and 4.9%, respectively, from the year-ago actuals. Canada Goose delivered a trailing four-quarter average earnings surprise of 71.3%.
G-III Apparel is a manufacturer, designer and distributor of apparel and accessories under three types of brands, licensed, owned and private label. It currently carries a Zacks Rank of 2.
The Zacks Consensus Estimate for GIII’s fiscal 2025 earnings and revenues implies a decline of 4.5% and 1.2%, respectively, from the year-ago reported actuals. GIII delivered a trailing four-quarter average earnings surprise of 117.8%.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Stitch Fix Rises 38% in a Year: Is the Stock Still a Buy?
Stitch Fix, Inc. (SFIX - Free Report) has experienced a remarkable jump in its share price over the past year. The stock has rallied 38.2%, significantly outpacing the Zacks Retail-Apparel and Shoes industry’s 10% decline.
The company’s enhanced operational efficiency and growth initiatives have also helped it outperform the broader Retail-Wholesale sector and the S&P 500 index’s growth of 9.1% and 4.6%, respectively, during the same period. This remarkable surge has sparked curiosity among investors, causing them to wonder whether they have already missed a profitable window or there is still room for further gains.
SFIX Stock Past-Year Performance
Image Source: Zacks Investment Research
From a valuation perspective, this leading lifestyle products retailer is currently trading at a low price-to-sales (P/S) multiple. Its forward 12-month P/S ratio is 0.31, down from the industry and the sector’s ratio of 1.28 and 1.43, respectively. This undervaluation highlights its potential for investors seeking attractive entry points. Moreover, SFIX's Value Score of B underscores its appeal as an investment option.
SFIX Looks Attractive From a Valuation Standpoint
Image Source: Zacks Investment Research
SFIX’s Client Experience Through Personalization, Innovation
Stitch Fix’s client-first approach has been driving notable improvements across key performance metrics. By expanding its assortment with trend-forward styles and fostering stronger relationships between clients and stylists, the company has seen a meaningful rise in engagement and loyalty. Customer requests for the same stylist have reached a five-year high, indicating increased trust and satisfaction. Additionally, the introduction of flexible Fix options, now allowing up to eight items per shipment, has further enriched the overall shopping experience.
These efforts have led to a consistent increase in average order value (AOV), which has grown for six consecutive quarters. In the second quarter of fiscal 2025, AOV rose 9% year over year, with a significant 16% spike on Jan. 25. This trend reflects improved alignment between clients and products, as seen through stronger keep rates and higher average unit retail. Revenue per active client increased to $537, representing a 4.3% rise from the prior year and reinforcing Stitch Fix’s position in the personalized fashion market.
Profitability also continues to strengthen. Gross margin reached 44.5% in the fiscal second quarter, reflecting an increase of 110 basis points from the prior-year level. This improvement is largely attributed to higher AOV and better product margins. We anticipate gross margin to expand 40 basis points year over year to 44.7% in fiscal 2025. Contribution margin was 33%, marking the fourth consecutive quarter above the historical range of 25-30%. Operational efficiencies across warehouse and styling teams have played a key role in this improvement, and the current cost structure is expected to remain stable.
Ongoing enhancements in personalization and inventory curation are propelling Stitch Fix’s transformation. Keep rates for new styles have increased 7% year over year, signaling a stronger product-market fit. AI-driven tools are helping the company better understand and meet client preferences. The introduction of exclusive in-house brands such as The Commons and Montgomery Post has expanded customer appeal, with the former brand emerging as a top revenue driver in the men’s category.
Stitch Fix Gains on Market Expansion & Brand Differentiation
Stitch Fix has been seeing positive momentum in revitalizing previously underperforming segments, particularly men’s and Freestyle. Both categories returned to year-over-year growth, supported by increasing demand for high-quality apparel. In the fiscal second quarter, cashmere sales grew 400% compared with the previous year period, while performance workwear sales nearly tripled. These results reflect a shift in consumer preference toward versatile, premium wardrobe staples. The resurgence of the Freestyle platform has extended Stitch Fix’s reach beyond its core subscription model, opening new pathways for customer acquisition.
The company’s focus on proprietary brand development is further strengthening its competitive positioning. New in-house brands like The Commons have quickly gained traction, emerging as one of the top revenue contributors while delivering higher margins. This private label strategy allows for improved inventory control and creates a sense of exclusivity for its customers. By blending these unique offerings with well-known national brands, Stitch Fix delivers a curated shopping experience that enhances client loyalty and sets it apart in a competitive retail landscape.
Final Thought on Stitch Fix
Investors may find Stitch Fix an attractive buying opportunity due to its ongoing business transformation, focused on personalization, operational efficiency and brand differentiation. The company is showing clear signs of improving customer engagement, expanding margins and revitalizing key segments, all while trading at a valuation that suggests room for upside. With a scalable model powered by data-driven insights and exclusive product offerings, Stitch Fix is positioning itself for sustainable growth in a highly competitive market, making the stock a compelling option for those seeking value with long-term potential. The company currently has a Zacks Rank #2 (Buy).
Other Key Picks
Some other top-ranked stocks are The Gap, Inc. (GAP - Free Report) , Canada Goose (GOOS - Free Report) and G-III Apparel Group, Ltd. (GIII - Free Report) .
The Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for The Gap’s fiscal 2025 earnings and revenues indicates growth of 7.7% and 1.5%, respectively, from fiscal 2024 reported levels. GAP delivered a trailing four-quarter average earnings surprise of 77.5%.
Canada Goose is a global outerwear brand. GOOS is a designer, manufacturer, distributor and retailer of premium outerwear for men, women and children. It carries a Zacks Rank #2 at present.
The Zacks Consensus Estimate for Canada Goose’s current fiscal year’s earnings and revenues implies a decline of 1.4% and 4.9%, respectively, from the year-ago actuals. Canada Goose delivered a trailing four-quarter average earnings surprise of 71.3%.
G-III Apparel is a manufacturer, designer and distributor of apparel and accessories under three types of brands, licensed, owned and private label. It currently carries a Zacks Rank of 2.
The Zacks Consensus Estimate for GIII’s fiscal 2025 earnings and revenues implies a decline of 4.5% and 1.2%, respectively, from the year-ago reported actuals. GIII delivered a trailing four-quarter average earnings surprise of 117.8%.