AI stylist Stitch Fix advances on upgraded 2025 guidance

Quotes on Stitch Fix, a small-cap company that uses AI to assist customers in selecting clothes, soared more than 20% in premarket trading today, March 12, after it reported stronger-than-expected earnings for the second quarter and upgraded its 2025 full-year guidance.

Today, Stitch Fix jumped over 20% in the first minutes of premarket trading today to $5.10 per share.

Yesterday, the company released its financial results for the fiscal-2025 second quarter (ended February 1). Even though net revenue was down 5.5% year over year at $312.1 million, it still managed to beat the upper end of Stitch Fix's own guidance by 4%. In its earnings report for the fiscal-2025 first quarter, released in December, the company guided for a 9-12% year-over-year decline in net revenue to $290-300 million.

In the second quarter, adjusted EBITDA came in at $15.9 million, nearly double the lower end of the company’s guidance and 22% above the upper end.

As a result, Stitch Fix revised its outlook for the fiscal-2025 full year: It now expects a 7.3-8.5% decline in net revenue to $1.225-1.240 billion, versus the previous guidance for a 12-15% drop to $1.140-1.180 billion.

Stitch Fix brands itself as a leading online personal styling service. Its AI algorithms help customers to find clothing that fits without endless try-ons.

However, the company has struggled of late due to a broad decline in clothes sales, notes MarketWatch. In the 2024 fiscal year, its net revenue fell 16% to $1.34 billion. For the next two quarters, Stitch Fix has reported year-over-year declines in net revenue.

To turn the tide, Stitch Fix “has spent months trying to deepen the relationships between shoppers and the company’s stylists who help them pick out clothing,” MarketWatch reports. In addition, Stitch Fix has sold its UK business and says it has expanded its assortment. These efforts have already contributed to better-than-expected results and are seen as helping the company to return to net revenue growth in 2026.

Stitch Fix is up almost 78% over the last 12 months but still slightly down for the year to date. Analysts remain cautious on investing in the name currently, according to MarketWatch. Out of the six analysts covering Stitch Fix, five have “hold” recommendations, while one rates it a “sell.” Their average target price of $4.80 per share suggests 13% upside versus the last closing price.