Stitch Fix Q2 2025: Navigating Contradictions in Client Demographics, Growth Strategy, and Tariff Impacts

These are the key contradictions discussed in Stitch Fix's latest 2025 Q2 earnings call, specifically including: Customer Demographics and Target Market, Strategy for Private Brands, Active Client Trajectory and Growth Strategy, and Tariff Impact Assessment:



Revenue Growth and AOV Improvement:
- Stitch Fix reported revenue of $312.1 million for Q2, with a 710 basis point sequential improvement in year-over-year revenue comps and a contribution margin of 33%.
- The growth was driven by improvements in the quality of assortment, healthy inventory position, and a 9% year-over-year increase in average order value (AOV).

Men's Business and Freestyle Channel Recovery:
- The men's business returned to year-over-year revenue growth in Q2, with significant increases in categories like cashmere (over 400%) and performance workwear (nearly 150%).
- Growth in the Freestyle channel was attributed to expanded data-driven forecasting tools and increased shoppable selection by 20%, without any increase in inventory ownership.

Inventory Management and Gross Margin:
- Stitch Fix reduced its net inventory to $109.6 million, down 13% year-over-year and 8% quarter-over-quarter, driven by improved inventory management using AI tools.
- This resulted in a gross margin of 44.5%, up 110 basis points year-over-year, primarily due to AOV upside and improved product margins.

Client Engagement and Active Client Metrics:
- The company saw progress in active client engagement, with clients new to Stitch Fix increasing year-over-year and the smallest sequential decline in active client count in three years.
- This progress was achieved by enhancing client stylist connections, expanding flexibility in the Fix experience, and investing in Freestyle as a complementary platform.