The apparel-box retailer is gaining market share, but the tough consumer backdrop took a toll at the end of its fiscal year, executives said Wednesday.

Stitch Fix is no longer expecting its number of active clients to rise in fiscal 2027, and sales will suffer from starting off with fewer active clients, executives told analysts Wednesday. Customer acquisition costs spiked toward the end of the fiscal year, they said.

“Our outlook reflects a more challenging consumer environment,” CEO Matt Baer said. “While these conditions affect our near-term outlook, they do not change our strategy or the opportunity ahead. When clients are more intentional about what they buy, the value of a personalized service that makes each purchase more relevant becomes even clearer.”

Since his arrival three years ago, Baer has overseen a turnaround at the apparel-box retailer that “has created an altogether healthier, more dynamic business than what was inherited,” William Blair analysts led by Dylan Carden said in a Thursday research note. But the 2027 outlook reflects “a clear setback in confidence,” Carden said.

“Most notably, active customer growth remains elusive,” which has been a sticking point, he said.

As Stitch Fix’s performance has improved under Baer, there has been less skepticism about its model, where boxes of apparel are sent on an intermittent or regular basis to subscribers, who can also purchase items à la carte, with guidance from human stylists and digital tools. The retailer has gained market share, Baer said, citing Circana data.

But, while some initiatives are working, the company still has much to prove, in light of its struggle to grow its regular customer base, UBS analysts led by Jay Sole said in a Thursday research note.

Source link