Stitch Fix (SFIX) 7 Dec 222023 Q1 Earnings call transcript

Hello and thank you for standing by. Welcome to the Stitch Fix First Quarter Fiscal 2023 Earnings Conference Call. [Operator Instructions] It is now my pleasure to introduce Hayden Blair.

Good afternoon and thank you for joining us today to discuss the results for Stitch Fix’s first quarter of fiscal year 2023.

Joining me on the call today are Elizabeth Spaulding, CEO of Stitch Fix and Dan Jedda, CFO.

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Hayden. Thanks,

year a and year As base on the we our XXXX focus stated clear transformative of profitability. with a growing Freestyle, achieving on following call, began with quarter’s rollout we fiscal last client

achieving long-term business. balancing the be uncertain, cost growth to objectives are need structure macroeconomic further our the environment now the continues As of to optimize the against we

nimble moment continues in experienced this which our the on this the profitable determined a approach than for promotional weak and experience details quarter. in which of enhance net declined XX% year-over-year. a and to are and Today, as cost believe had was control, Stitch spending clients. declined pull our due us to for more client leaner, and forward sentiment a holiday this outlook to to consumer Overall, provided active which few resulted the discuss QX, retail EBITDA of expected year-over-year QX In a are negative pronounced lower We catalyst be impact $XXX.X industry provide net will efficiencies We meaningful while on the operational clients, Fix, to more million, to environment, the the our confident large in also continuing we more create Dan inventories. deliver a call. use the beat adjusted the to on in fiscal his and quarter this, XXXX balance revenue of XX% first enabled low-end Despite QX our on to at on provided million areas. section. the range plan $X.X continue excess for which key will and I

to First, to discovery, operating already focus our we strengthen second, audiences how fit simplify our and on a the on are biggest create engaging strategy reactivating and our of and relationships; evolving to our us. plan continue further our profitability on how experience more efficient emphasis to structure we differentiators that marketing increase lastly, and we human our focus an model; with client how cost know

focus leaner operating model. our and profitability on First, on a

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discussed. the $XX our we two $XXX million previously announced that ‘XX quarters million targets to increasing ago are to FY we reduction from such, $XX As cost million

areas. on the are these We simultaneously without is That biggest of enhancing experience the further more reductions background To focus the in execute enhancing initiatives in growth critical that you understanding long-term experience. to more we our more fixed compromising efficiently move to said areas working from and number an achieving potential, give most much presents. and variable reinforce, the want differentiated believe later business current the our our also and of to in to us business what which profitability. do client our are highly of we productivity recognize foundational come while new is forward focus we the a model targeting we on will I on on, advertising, We will we discuss can need While operate environment. client

otherwise Our clients tremendous have found choose the fit. and for styling for service personalization to in and not we convenience would items themselves client deliver for find our the they style Stitch provides Fix

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terms strategy in from yet us, prospects not of over our number In ecosystem, signed-up have increased testing large the we which of first quarter. to a XX% conversion a purchased who outreach entering new progress by quarter, last made

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back client served a with clients and to opportunities fixed in personalized way keep preview to In heard again of we fixed terms clear coming retention again, moments see critical feeling and at checkout. and improve

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As on a lower prospects. funnel digital and spending business, we have performance-based relied client on channels

did and to once were. less prove are still these be now they successful, efficient While channels than they

have to have acquisition of significantly testing that interacted clients Recent never In us, ecosystem. over addition, we we reengagement ever less than not who per a bring interacted cost a us. with or have with have directly pool can but purchase XX is already target million showed the consumers more prospective into made for recently back of pool our that this

and continued to help we for Our who them Fix. experience to reach know has rediscover already love want us clients evolve those their and Stitch

to take which for long-term affiliates, In will are and free the focusing over ahead to acquisitions. flow the and positivity such to achieve we over With things channels, will In time to the expand uncertain confident times. but to meaningful to set moment our important customer contributors, time while that, the are of continue opportunity new potential. differentiated as addition, we SEO summary, influencers we our within will continuing adapting ourselves our remain our and and meet in adjusted EBITDA model and us SEM, we into marketing turn maximizing develop long-term under-penetrated in these unique business I will call Dan. be on cash near-term these control, in By up

Elizabeth October outlook the forward largely you, came flow. our particularly XX% holiday was at effective goal Adjusted impacted to in free cost to industry net Freestyle to we which to came deep and and advance EBITDA to controls year-over-year our discounting million, due due clients season, declined of guidance towards Thank continue the negative our well hello revenue quarter Net $X.X the as declined industry. promotions across and positive for the clients million, the adjusted cash $X.X at million. of in of active has drive active QX on above holiday-related quarter revenue. a which pull normal in EBITDA everyone end call. net $XXX.X to low The lower in experienced year-over-year the XX% the of

from year, of quarter. QX to was an the this of we were clients the onset While improvement sequential loss QX net at last than the expected lower what active from

high we active seeing delaying continue spending at was Revenue new of environment. While client a macro active an number the are year-over-year see due customers, approximately increase to customers we partially in $XXX. to flat per

unfavorable of spending cohorts in are retail primarily reserves. due product the broad improved to up QX deep expected backdrop a year-over-year. was margin costs QX from does seeing points expect economic continue However, costs, set inventory to at given discounting mostly Sequentially, the that margin points XXX by transportation driven the our show and clearance across we less as we industry. came are in analysis gross clients basis and XX.X%, higher and XXX down year-over-year, higher gross basis this

approximately quarter. gross of be believe to XX% Advertising revenue continue of margin We was the in throughout rest ‘XX. will X% the FY

rate For to we Elizabeth than be a revenue the advertising due expect shift lower of remainder to year, discussed. percent the our the as historic of marketing

laser-focused ROI new channels. will out see build on dollars advertising marketing near-term be will spending continue positive where and we to We we

half flow negative our X% year, inventory. this remainder placement in will approximately on sequentially in our Net inventory cash expect receipt cash, with be the of we year-over-year advertising X% and QX expect rated are last receipt continue lead cash managing right securities. revenue, higher For down highly the We decline we continue second for advertising did $XXX ended the and expect grew to we equivalents XX% the and long in year. times aggressively of quarter evaluate inventory but order We investment. from given to bond Free of to to $XX inventory due come volume. return quarter to adjusted million to to we QX the ensure higher was year this spend to the million our to of in and of we

and purchases environment outlook. forward. as rates revenue levels that to inventory therefore, The on pricing inflation and deeper actives are net across impacting around increases our consumer high the with we of discounting challenging economic know trajectory retail high uncertainty Now look the We of impacting are of industry.

plays Additionally, less we times, a reducing these are season. the amidst story the for promotional our certain rest how the spend very of revenue advertising out year. are holiday In we

focus for of promotional backdrop, million as net the environment to clients throughout the $XXX with so continue experience, client light anticipate And positive expect continues this our be the to goal pressure we flow goal active of free the the on EBITDA while see be continue revenues of overall on end and holiday and our we between to million near-term. cash improving our costs and in quarter. adjusted In continuing $XXX managing to QX becoming to

and reflecting million and spend. reduced of EBITDA $X adjusted primarily the efforts advertising ongoing to million, structure $X expect be for We a positive negative our level quarter cost between

be on environment the this, our for Given landscape today. reflecting million challenging reduced our the we and are full negative in positive year balancing to management see outlook initiatives. raising billion advertising $XX year visibility current adjusted competitive backdrop, be our no and we where $X.X revenue our the cost million between marketing and FY current macro it material we our levels to and $XX from $X.X and are between EBITDA and Despite lowering guide ‘XX billion. ongoing efforts assumes This this retention around in uncertainty change

call to know In remind over economics contribution to leverage. in increase order to unit at everyone opportunity profit, We cash our near-term our focus focus position, advertising leverage further to is and fixed the to flow. fixed and on Q&A. to and improving our be the we cost continue control, to Doing it deepening want turn Q&A, positive range the an things and rightsizing differentiation a with current a the With turn in to the for levels, healthy variable opportunity in and therefore, excluding I we our will on Before improves strong, with can we structure, I that to this our profitable all economy XX% up client EBITDA and improving meantime, see free adjusted to producing even overall XX%. both improve will a experience that, growth. we return us of margin sets contribution be the strong for and to there as addition continue operator costs over

Instructions] [Operator line of with from the our Squali question you. Truist. comes Thank And first Youssef

you guys. Hi very Thank much. Great.

features, a the questions new So and on just user of some call, the were a you you that drive product couple experience. One, guys guys to efforts me. little of about enhancements, last talked improve for personalization earnings the doing bit engagement

making, then you rest of to correctly, would how campaign mid-September. You for that you Can also had of speak you are of in you a are Second, year kind the to be there? speaking, brand efforts standpoint? expectations? at launched, you. an the I And you are did the if from remember just year? relative inventory the own positioned to your Thank campaign the where like how one, end the was of broadly kind Where inventory the

first Hey, let I’ll that take then part and can Dan speak inventory our I thanks, Youssef. to the of position.

of that experience. did gives I think been which clients that are starting to customer confidence we in the but That we to the Stitch and we what We the improvements are dynamic the in and aware are experience, about that to how we Fix area things enter right entry with styling our clients quiz landing Stitch it on differentiators our one-time that style our on of quarters of further terms e-mail On on we the coming we to that we to was with this from, we call, improved were create seamless on experience. entering experience improvements some new have conversion, really and some like last have areas more significantly our and progress QX focused friction. login, client sort we that of even begun doing And alluded featuring an I the with unique user pleased like depending and things into us several our customers on just where capture, pages leaning we very including experiment making over an things into new lows are off to of, the in delaying as works are Fix pay that’s are talking create dividends. the are

progress focus that well as these So are had truth making also of the critical moments broadly, as continuing kind more of pleased within and within the checkout I user experience with experience. doing we on within to More mentioned preview fixed the there.

unique over ago. wave a I what increased there. and listening educating to related UK consistent time on have made retention inventory eager now it around that we of one U.S. rolled number how out a that the to of pages and – of kind so early preview, differentiators. and surfacing on focused we to that first that’s client bridge learning, that on improvements we had quarters. into really really that were educating our very coming consumers, how And to we’re works clients. was these question time of a always kind a and are yet overall the an consumers the launched we’ve campaign, little like more improvements rolled and we scale brand we as good fixed the come across of two see AOV mentioned We year done that the bit the over And landing the and those we’re out how tests, or your next the We seeing messaging dive then them to and and in as on in and on was campaign but a – we’re our

And what We of proposition. strong. in that from like the so we’ve qualitative we’re feedback terms hearing consumer the of is appreciation received that consumer value

we relevance think layered to within are at how OTT. some of attributed about TV We organic something that influencers that talk kind also It’s the we within that being be talking could conversion traffic improvements Stitch how – Fix, imagine saw campaign. of we in and our

the something we is I build it’s in and of Dan our So will the that on conveying really proposition. question. on value inventory future anticipate position we part will let unique touch

increase we And November through the week us throughout mentioned expect we we be in expect the inventory, did December. to that of peak. the we and did this million even decrease are On the as call, quarter, and $XXX seeing inventory, first to prior

is expected. we the where So right trajectory

be lower in will QX. We

We’re going in our of for be year. because and rightsized half to lower we QX to sequentially the second have continue the QX buying

it will the and half in go on basis So be a inventory of I that negative will down, suspect year. year-on-year the back

That’s helpful. Thank you.

question from Simeon And you. BMO comes of Thank the Siegel with Markets. Capital our line next

you’re retail. I on have having the this adds I you hoping it more And little Thanksgiving. client if was color if a could hope versus everyone. heard nice doing little and guess adds. give was I I and I hoping you then well, bit any I quarter. about a bit shop the that a correctly, net apologies where impacting and maybe sounds didn’t, on a Thanks, net choice typical could comment consumers for to traditional gross elaborate

I shoppers. the loyal had insulated you fixed guys given So guess been maybe

forecasting guys. approach I the are misheard, now or that positioning the if apologize. business? pivot if existing And how against retailers, Thanks, client traditional to So base I the and customer focus a competing change does is in on the or active you mistake company? seeing running you Again, your

as well. start, I feel in can free to Simeon. Dan, Thanks, chime and Yes.

on versus the important in we of competition it then forward we terms is traditional think see typically And earlier compared to I think the did touched versus of August, of a think Dan relative that in what an of environment quarter-on-quarter, will in I longer, we September, we And add lot to the also to talked to we us pull softness I attribute adds, haven’t experience, the believe think on So marketing clients in overall, increases retails. just clients, than lot what so That something referring on reactivating those impacted spending. driving think seeing average who XX time. our the AOV, we what in where front, have that and retaining just pull I with offers said, macro retail space that, that all QX That see, plus, we part net of increase focused The an did We improvements in in would far in in saw and have increase clients back clients that gross that QX. said, the mentioned in on efforts promotional happened months things the gross like is the a we our over our unit did in that there as in of Freestyle spending. could is calendars we Dan improving to we see I and would see I quarter-on-quarter, seen. other category we were terms promotional retail, the with to shopped of be about some cohort some players we’re the were anticipated. by cohort

judicious Our being that more macro in consumers their just spending. are they this are us environment that with telling

purchases. and we our frequency stretching seeing those holding rates values keep steady, And are and so while out average our some stretching of freestyle are of out order

October proposition. we compete That Freestyle and So in by in value which we particular We particular, unique believe like relationships. really, in very environment, impacted human more we our on fit really time think frame. said, I probably that in core things in still August, Discovery are September, is promotional saw

then made you year-over-year that this very And that’s ASP. was quarter? comment Elizabeth, follow-up the it. a ASP How just, Got quarter-over-quarter maybe helpful. Thanks, about just on the

Yes.

and basis, points priced. was XX% Part We mean, percentage frequency few a I AOVs more into goods a over health, think similarly in saw I increase and of we see that quarter-over-quarter, say, that that AOV ASP we part on spending think leaning pullback. think an outerwear overall, of would on slightly I seasonal. it quarter-on-quarter. up is ASP I of higher and general, it’s I are our retail, saw in average a But we within more unit saw maybe do

guys. much, Best rest the of Great. the Thanks for luck holiday. so of

Simeon. Thanks,

R.W. you. Thank question comes from line with our the And Altschwager Baird. of next Mark

Good see points are the afternoon. question. in go macro? a to aggressively consumers give my platform temporary more to engaged shift haven’t that with the TAM the the of With confidence marketing to what the taking current is want transformation strategy, before? this for shift you proof Thanks respect after the Or in who to you in

there in are part the to Yes. marketing to best Thanks, clients clients those. channels believing Mark. a further environment I happy is strong belief and and response reactivating it expand really a opportunity really some that of but also is for our

is the focused to remarks, I on I marketing this just of did in just we expansion TAM of think new near-term were underpenetrated. positive his about been mentioned as very I, think thing addition some being Dan that In deliberate and One very into channels ROI. these historically we’ve areas

really flow And really disciplined just to positivity terms we’re of we payback deliberate EBITDA thresholds, cash be what essentially seeing the in macro free being always the the backdrop made raising our periods. so just through decision which positivity, very more just ambition we’re work think and bar in given of more of payback I what is We the and those even disciplined.

business. has faster become time at that and have That more doubling clients opportunity past. we in the as grown on even to using us an to mature also really loved obviously over as that are opportunities opportunity We reactivate it a down go pool

into next full the the And based learn in near-term. to few it’s so view a learn and go paybacks not Dan our more more mentioned But we’re quarters. we on seeing, paybacks even the as to on opt year. X% may It’s will permanent for the And shift. be let’s spend forward. more we the But over disciplined X%. best this That’s we

you. you manage a such engagement that would position of what doing to kind competitive impact backdrop a in What dynamic on does or And heavily your make Thank price the can there? do Freestyle, it then follow-up sense promotional are environment? you

It’s on arrivals from first Yes. great think focused outfits continuing of one-to-one invest And showing feed things how those most question. them a just of I our are conversion the to in we’re like a mean new new that new very biggest a relevant output-based know on, e-mails. that’s what all, increase rate One new consumer focusing things like wear content is of more added converting. of context XX% out in that I for to dynamic example week. every outfitting, already each on in our to we’re of and recently each shows Part value wardrobe items our we clients. saw to they making we we is We our hearing consumers arrivals have. that through each do arrivals e-mail bespoke client, highly that is, outputs that differentiators, the

is on the differentiated of more part moment. our make us relevant week and think, special relevant just being that week to strategy, and and So things I

any had style. is clearance valves, we think sort pre-free offer, time limited really the of never other I

feel become But calendar we relationship the with what quarter. fully also within around relevant value would really creates focus a retailer, this our say, calendar, goal an to I events these experimenting are promotional and of a the course episodic consumers first on like differentiators over the retail but of have once map recognizing moment to year, Freestyle meet discovery So is opportunity roughly, really foremost, we to promotional not that fit there been deliver be while more to human the and seeing. with and

Thank Happy holidays. you.

Mark. Thanks,

you. Piper question line Sandler. Thank from the comes Yruma of next our with And Edward

you negative, drive saying changes adds are fair of guys. Hey, I we’re environment follow-up, are for obviously the if And a correctly. relationship sure promotional or framing less about can effectively remain that net game becomes I it’s picture good making off this question. up ends that off towards? assume that first, stronger prolonged, know what question until to price net evening, will Are to there you’re kind until coupon game, the in particularly a that we that’s profitability? promotional guess, as and you’re you bigger adds or value that other Thanks taking staying going as trade environment and the the ways but not Thank the then consumer percent think you pivoting a that you.

you, Ed. Thank Yes.

focused, and profitability terms in point, return that, first the to both cash I think of this On focus. free and we’re main is and where positivity foremost, I first Dan emphasize that our flow EBITDA

marketing spend the being we and current So pull would on that. deliberate for much then this intentional very focus of ROI decision to are emphasizing I And back positive. very say, given the near-term macro environment and

with clients in predicting believe the that year. sequential We’re particularly all experience on we’re working the future, not that That that about sets that I said, the both really we of client Adapting marketing for client net more to things background, in do the up retention. inflecting return focus us this already us active know a base the healthy improve on growth to as to the economy our improves. client talked

places know to offering, promo clients. say environment, critical fixed we the value with delivers five So very of experience. the we on on together most then our discount buy focused profitability the always customer I which our had within have we’re would And

of we and compelling offering to announce to our a places across systematic program. over as our extent, a what all Freestyle the and for time. that that Style deliver elements opportunity between have items now see Pass is those more is but a to where essentially over our have customers customers road fixes. some jumping there map together really untapped to in we such ecosystem on bring our know an expansion value fix We really Those XX that kept for are we unlimited loyalty to point. program off offer yet, Nothing them of

just So the nothing we timing. in definitely terms specific announce see something to of road, down there yet

Thank you.

And from question Partners. you. MKM of David our line Bellinger comes Thank the with next

Hey, thanks for taking my questions.

on the for revenue first So one the year. guidance

year QX within see did so then? guidance year? the the the change took the Just the lower how adjusted trends you QX so towards albeit pace each of terms subsequently for the So about it range, down have the end, far should fell QX end and since of your in of revenue we in in you materially of further which slow shape quarter towards think

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forward that as the a about would revenue. a of we the full $X.X is way billion just the for for similar basis year-on-year guide gave the of it given the of on the that $X.X year to guide I is more billion it’s think quarters going that So change rest negative

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like brands, and and majority national really Dan, course free I exclusive in onboarded the introduced I mix strong FY together I we Stitch we year over with of brands We latter mean can our Fix the feel is the make the feel plus, start, of XX think of only to healthy in. our last brands which ‘XX. mean, chime I up inventory. north a of

keep us that in adaptable rebuy like refreshed grow our product reasonably leaning to different into. outerwear have And dresses. that we able will makes footwear a to been have and We approach exclusive our Freestyle with categories particular, we brands and

we think of I lot right a have So product. actually the

into see of category into That, some is of the fourth didn’t I’ve of experience, other this we the fixed year our rapidly men’s, we very product as work some getting built infrastructure our on or lines Freestyle platform, TAM. site this focused on in of to we’d mentioned of in of women’s, ourselves we’re think kids we unified some the things a let’s to the after go different scale of the work to true really course, like think, lot are towards categories. Now UK. which as a get launched have was on like It business calls foresight know prior up our growth layers I the expanding the that client business into setting multiple possible I data fiscal background that say for expansion,

as categories all more speed these of we So consumer. can in a by bit future feel like we the the are we But we on year essentially preparing fiscal have that ‘XX. our to right that infrastructure new for into add said, down slowing assortment our so get we up

grown of on penetration we’ve leaning fashionista, over we focused well very super we our what a call mom as of used XX women’s the that the fashion to a last and combination know as actually months. client We’re within into

you. Boruchow Thank of Ike with line question Wells comes our the Fargo. next And from

for the evolving be Sobelson the guys you is with such? environment retail a Thank little practices in landscape you. calendar I with and promotions just on retail being and the promotional plan general offering on the curious to with was Ike. line Freestyle business challenged maybe bit general today, offering Jesse do more the with ever This

say question. you just like traditional. when for Can the Hey, more clarify you thanks Jesse,

such retailers priced. is A be on holiday understand I whereas the exhibit for a promotions Freestyle or as typical lot more a deeper calendar traditional typically of summer of whether it discounts full kind depending little on sales bit to during period selling,

in the So in line in some other with I cadence of be offering more potentially if the curious adapting was any there was industry? apparel distributors interest to the

Okay, got it. Yes.

I would things guess I bit So a a offer. little mentioned I this earlier. few

of Freestyle, shopping, happen is terms our which we’ve XX% between past of XX% in conversions differentiator. highest a areas think in I in big this of outfit-based First, converting our to some the shared within

they them already trending We’re to have helping outputs curated we been go as well what in detail see for items clients algorithmically see able output-based have any purchased generated of that based something our product think by on stylists. as could being our of as as well in is what with items context as as shopping well pages the that outfits

offers full-price into time same traditional during we that’s one come we is that characteristics, time a site periods people those to have flex limited see that done can items muscle interesting retail episodic, as thing those experience. now halo to that similar effect we as the So,

event, So lean our we to of in and Friday, we I good Cyber absolutely to on terms likely forward. as mentioned questions the we we’ve what think had time first they the experiment five which rewards Style fit. able lift We saw we Monday to in down to loyalty, same Black will but were the continue in differentiated we of being Pass really the see relevant rewarded offer they I way buy back clients of but the prior clients always got our in of a are seasonal which style is And periods, want balance road, notion do that to do no best, one offer discovery had good fix. I to those items just window. line based on if share a time to able being think our what yet strike here we But I ultimately

to unique to than retail just on really the calendar, focused So I trying us. replicate to what’s we think would rather like be

you. Great. Thank

Nikic Wedbush next the question our of from line Tom Securities. And comes with you. Thank

to of the Hi, by be the conservative the predominantly Thanks. cut recovery lot business everybody. to it when Is Freestyle my that more in because driven Freestyle again, is Thanks revenue would assumptions, business? growing it a for if the Difficulty] guidance taking safe [Technical start assume predominantly a you question. inflects

cut out Hey, here. you a Tom, little

I guide your reduced is was, Or the just let you just question back, but question? can I’ll the Was to that Dan play think clarify? answer think I largely driven Freestyle. by

expect would to that’s right. a driven recovery Yes, Freestyle well? as then by be And like, you

We revenue that. that’s about talked talked bit that lot about reduction to. Yes. Freestyle. a in reduction a I entirely of the the driven little can It some we take advertise, advertising. by in the in Certainly, reduction guided wasn’t

part – We just that we today. actives of where also are and net the is

And so while I do with important have and their to will think re-engagement, engagement And growth critical to help Freestyle will a – never profile, clients fix purchased as improvement Elizabeth we our the well. out business economy earlier style improves, about freestyle as certainly is focusing etcetera. areas that but drive who in on of us, are talked filled variety that with

of improve when will grow catalyst So, does be that forward. macro catalyst be talked going is also And well. course, environment, as about, we to that going the to the as a

Thanks very and happy much holidays.

Tom. Thanks

our Thank And question the with of from Madhukar UBS. next you. comes line Kunal

question. for Hi. One my few, Thanks. on is taking inventory if the side. could. Thanks A I

So, where QX chain reading I you supply the am And I to transcript. the about back ‘XX earnings go improvements literally from have you call, talked made. and that the

to many was that of especially today make benefits long directly? of this earlier we given rapidly, because you of lead said are control can what the big in of One business compare goods adjustments our the pretty in is I nature And call inventory higher the how of actually we time.

So, inventory? control be you down? the can up will the and with what’s chain? you us Are rapidly happening flex the you understand exactly can in of not Are first. supply help you That

just explain. So, let me

from our to of product, to course, of is of lead our time. order which exclusive receipt products, First a order inventory of for especially, placement is made brand about lot a six-month all,

and long other are up Actually, months. And times. they there flex longer probably we product. are or in, that within a other So, down but areas national six exclusive lead areas, fairly sizable even pretty than have brands specifically can we those are

in demand what was I nine higher when different a why – to had placed we those orders is was because our months referring we now six So, to is had months inventory trajectory ago.

– QX pockets adjusted, down of to opportunity, go year. the inventory why That do depending But fiscal have fairly well. since we and slightly exclusive are throughout we down chase to longer demand the is, for of our where can times which our we continue we rest well, go on absolutely there in and that product. expect said, it into these We do that have where then lead is and exclusive

Thanks. Got it.

extremely were one year-over-year. advertising X% even But significantly was That XX% advertising X%. disciplined would quarter, this X% cost guided of anything that did were spend means And what to is then. sales some of is, be, you XX% below Second your down pre-COVID. to like have when year-over-year you that down to X% you

are of you will the following but For the year, guiding be of of advertising in quarters. in down the being the XX% the sales about each quarters, spread down rest XX% to each

should what even not the lower that So, right confidence gives us the sales than be now? guide

can I some how and that start Yes. marketing to touched extent manage of been very always feel we I on all, disciplined we to first have Dan we think add on. free both on that, Kunal. our call. on and I about spend I think mean the

time backdrop, spirit rigorous than really in are clear, this the just marketing very We payback spend. even our we ensuring uncertain in we ROI clients back to to be are our come typically have But of comes are to subsequent on as and we the of channels as the near-term CRM more existing period that of A sales revenue, spend. through opting not our time that to macro the portion be them and like certain of of in. paid marketing it’s from much result engaging

and of customers that growth customer subsequent new So, sales. also on is part part due in in base auto installed based our our but rate the are on it’s by ship acquisitions,

we one-to-one that shift earlier. expect or permanent should correlation spend relative got our question I rate. with that think of to don’t would overall perfectly in terms see a revenue marketing you is I I in downshift that think So, a not, say to

We make adjustments are as day-to-day, and measure accordingly. to going do, we week-to-week always

been of influencer areas are to we goodness have Stitch Fix, as will underpenetrated the there, we affiliate SEO, SEM, we some begin And that scale that leaning start for those. see new to into

of base that delta number of But is the as would the those customer is So, may change installed new acquisition. over rate part and growth between two rates time. rate an part say of course, growth net-net, I the that

one to see we and rates keep last flat, comment if frequencies. this And Got one, but with is could. it. regard And stretching Thanks. I the are we around

is months into thing? that give And stretching? into maybe in every months could of the frequency fixes stretch year once every next can you like X So, push XX – further kind the of that or once a us is sense to order how

start can I that. Yes. on

Our clients every three – months. universally aren’t university all like

occur which you fixes then have mix some are clients three months, six which a some cohorts, are every episodically all a – would that our say of call They at bit certain biannual. get they certain of that every are stretching more We out. what and of is cohorts. driving It’s things stretching to tend ordering of One across manual. and few I of fixes a of amount a we of which frequency. are some probably those weeks, a are little

everyone from three going to like is not So, it’s six.

to maybe higher ad some the going new frequencies. shipment have and to have then weeks down six-week have might – Somebody skipping six slowed cohorts, they also been of back a the we and are they as cadence. It that tend

just point. outfits with of also helping assortment. go our some overall result like things the apparel at the seen client velocity have points shift on of effective listening. And in of with the under being have $XXX I right was cohort with is where what frankly, are incredibly we we their having a stretching thing of price further our so and base And age. But at very meeting the of One clients, sort continuing a of describing blazer sweet the have spot to for goal mix really our price I of moment terms the women’s be how is strong think contemporary seen dollars sort we that just is $XXX we

are little over they time. what regardless are with that been or them meeting making same have just So, sure extending with they a looking us we for, the if frequency they bit are really at

so Got much. it. you Thank

Kunal. Thanks

our from line with of next Barclays. And the Trevor you. Young Thank comes question

Thanks. Great.

within expect Do X.XX. in the on most target first since to that, of given near-term kind the of And pulling really increase of current how advertising cost Just durable reduction is that in ‘XX is environment? and to more you advertising. back just versus that the much then realize all

here. would Yes. love definitely to Dan but Thanks I in can start, chime Trevor. I

As we we in $XX it. go said we tracking million, shared had to that beyond that prior to likely million we were to quarters, $XX and that

X.XX, that Now, productivity. and with meaningful this of increase fixed together variable fact, chunk to a is, in advertising dollars

Dan, of you do it terms want In more we realized. when that? just will see to on share

why how to and is X% as because – Yes. – will a out model do look very we of year. combination our second lot mentioned the the it basis, go-forward And fiscal of that And at advertising. on variable answer that’s it advertising, – be in That’s that That the a you are remainder we will leverage, the on be quoting realized and way of fixed of is closely. that that. which we part, your we revenue, X% when will will then a we see efficiencies to on course, you

We at ROI will that. look on the

– are pull to not we where We are we near-term positive going will we back and have where don’t. we spend into ROI

continue as – very And we that and, see the our indefinite that closely on then rest of is into of and efficiencies we going advantage obviously, won’t course, the year them. so take manage the fiscal variable will And for and ‘XX. those of forward the and fixed,

Great. Thanks.

the next Advisory of Dana Thank from our you. comes with question Telsey line And Group. Telsey

Good afternoon everyone.

revenue advertising right X% from particular there it you less? with And As trends the if the increase you the be? advertising from fixes? terms looking what seeing cohorts in X% terms this in product what impact see customers about about of to can or X% you then pricing, given talk number? Thank saw and lastly, and need the you X%, requested for And you. spend moving Freestyle delaying are And is to more seeing of both are year may what to any you are what are that and you to spending, made what to X% on you talking

second with that at of and Elizabeth can When across we start will I on did I we part it’s looked broad across in Yes. mentioned my question a will the many all cohorts. this cohorts, take cohorts. our I good question. we our that, we reduction prepared – look see a the ways in – different at remarks, And ask and spending

And client had every or in back, So, whether spend, cohorts, clearly, And spend looked many a the in couple it the quarters way. set a even continue is saw who competitive this we and seen quarters increase. go first for to of broad quarter-on-quarter XX-plus macro tenure, these and the an clearly expect of which has fixes in factors. inflationary quarter. down do landscape their given at spending high that the in we cohorts latest across a back, we the fiscal and XX we overall increasing the just We saw client it’s of environment, while regardless environment impacting fixes macroeconomic

touch I question can Dana, And marketing question. the trends the on and

our this – more the would hearing of calendar so to trends will next with some sort end use what our clients then of of surveys clients, of annual can back we of quarter, shifting to of million say style for So, week, which X.X we we workwear out year and of our from particular, that from the some give our come over ago. saw and data, that into what I we saw consumer release for forecast, we about we a our start the maybe are are year. predictions some women’s I in in are preview forecast some saw will I are coming and stylists, there work, casual in But terms of style what from our seeing industry quarter a

So, of spot were XXX% we a real structured particular point. blazer price Those north sweet up in saw growth, year-on-year. area blazers where was an sub-$XXX the

of a saw shift kind address to also a workwear of We variety your styles silhouettes. with outerwear and

and also year-on-year. strength booties up saw within last We against year, XX% heels over

the evening. night female out who So, again, into is transition clearly, styles can going consumer and that workwear a out

some of belief as that productive that of prepared stayed attire. often of really say segment with there a Within was the holding to cozy forecast, outerwear casual, who is seeing up as on things be us us have for and of reactivation I very X%, occur is work, prospects. Workwear wide then with mentioned then of strong seasons very brighter marketing the our going with velocity trends, flow clients we seeing timeframe with threshold more say have in now well strength our tendency really I and in the of things would for this parties we would And bolder that that shirt EBITDA coming in to those real trends going more doing a in way. assessment year strong free meaningful and kids of really is within together on shopped we spend, ourselves would I saw as to holiday also and holiday similar, the forward combination on the like And it and in some I on We a like after opportunity cash are focus remarks, then clients and being more and And future. the that men X% a the our segments jackets. are say, kind back beginning started with expecting areas are towards graphics ago, our shift which the to something very see colors leg to to we more back getting recently call but ambition group terms payback, not being signed focused bottoms, and several of

in was to still able create could with be the that be back together, more year. so really clients we but estimate do what momentum to efficient And our of the of half

you. Thank

Evercore next with Thank the you. ISI. Mahaney comes of line our And question from Mark

Thanks.

most have been my think answered. I questions of

So, I one. just will ask

will that outside on recovery, cause or several forward, free free you. that of of going Thank ability positive what be allow happen macro that and what to sustain to happen? variables flow can to control flow would Just most outside to macro factors flow the that cash the free cash key the not the are you Like you years? over next sustain positive the will cash

XX% healthy take to can contribution remarks, the end mentioned overall I prepared that. the marketing. margin ex I Yes. just at XX% which towards very of our is

at feel course, strong. order And some it that is getting are growing – of economics unit very revenue, so really, on We point. again and inflection do our like

$XXX productivity We all We are we rightsizing opportunity of of million a of our the part stated the have process structure. for initiative and variable cost work lot do are on streams call. that in cost these savings

we of guide think half. EBITDA good of about in So, terms and feel top And we that, shows adjusted that. the leverage about our the guide, on second feel half EBITDA – our second obviously, do is going good we there forward, that

– these streamline are through inclusive about. we embarked all need we continuing the we that our So, growing the that whether marketing, on working will of that structure. it’s some talked new that’s upon have new at right the initiatives point, to now, on again expansion a that we models the advertising areas and/or of cost revenue to And – combination of course, we we have get category

brands, better are between us. those and of basis of exclusively better Mark, sure making we our channels stronger long-term our exclusive and continuing but a in, the margin are reactivation really marketing There in I retention, where to I hundred where P&L see be things just right margin happier well. better points that of then flow. that I a also building several keeping very strength should of free return delta clients. right with would combination difference terms that’s we time in believe conversion, and clients we national guess point only, that the shift doing kind newer are of side couple in were on other that really gross continuing get that is I the drive would for make on our to investing up think Fix that that just – things, a add can more majority gross of we I just piece over brands, we And we sums the those brands, cash that less goods price a longer, do have Stitch with meaningful more as the think for penetrated it productivity these to are that

Thank you, Dan. Thank you, Elizabeth.

Bernstein. And Thank Sherman question of you. the line our Aneesha from comes next with

inventory. question is Hi. Thank you. around My

you lower about margin. an there mentioned you And quarter be more better is vendors, opportunity being the seeing months into talked lead slightly as I clear particularly brands your of are their to from am as they you probably from environment gross a this on national and that Elizabeth, buying national quarter well? going as there next then now? interest curious own So, seeing six may typical try inventories if time right time. also terms And a margin in follow-up you inventory, lead brands

macro be sell-through if weak the especially of are you or quarters? So, how that I to guess ‘XX have I would product, about think quarter assume for now next that the Thanks. you the goods spring/summer do two that see continuing risk you into goods,

the areas. have. opportunity being can considered really, to is of is been only we bit are are have in reserved summer some We With those inventory. on with Fix something it’s clients but we that our to spring to going not talked what continue But brands not our love. our exclusive anything focus an I we do it’s terms – brands higher QX, love for. to question on of within We just for fix brands that No, selective a there only load Freestyle. of brands we account have to top in the good different Stitch not of seen approached on we Elizabeth of as are margin, at national events, terms we brands, the haven’t time little feel question. what limited excess and mainly that or end that. do changed very beyond within that for are terms took the in And we And overstock in clear which right we we on often – that bringing think Yes. have a course, respect season, seeing us national our take inventory in and customers mentioned, that, and/or well that, reserves inventory, out to we in to inventory they invest feel clearance which about we spot inventory also offers avenues do whether also inventory, of the – have have we focus help we in some national

into at not do concerned the we it have this we at inventory, reserves Again, that QX closely. took health – the on which right and in lot while out, of season. very getting looked we of clearanced this just appropriate point. now, a and fall/winter So, going level we of pretty a the watch I inventory high our have focused about that am are since inventory

And we how three spot are quarters, watching in again, good come are sequentially that so And going forward. down inventory feel the we does. we to next a over as expect we

you. Thank Okay.

Thank And the line with of Williams from question Stifel. our final comes Lamont you.

for you question. my Thank Hi. taking

for already women. it’s have Freestyle the penetration, the and that about around I you answered, still on today? – consistent primarily, but talked that case Just believe Is being XX% pretty since

Hey Yes. Lamont, for the question. thanks

be half say, will get launching Those the the in encouraging believe things to we that We over in things, SMS, then we yes, demos. back in base. the there. that steady, client is would adoption of still stayed pretty we horizon last pretty and holding I of of do the say, But believe I kind and terms our it it’s overall, on quarters. for year that would stable, it have but new I opportunity there several steady XX% think it app were like at across stayed look higher we range,

Thank Okay. you.

Ladies now gentlemen, And And participating. you. Thank thank and does for that conclude call. today’s conference disconnect. you you may