Stitch Fix Inc (NASDAQ:SFIX) stock rallies 43.04% (As on December 11, 11:25:49 AM UTC-4, Source: Google Finance) after the company reported a narrower-than-expected loss and provided upbeat guidance for the current quarter. The company ended the quarter with 2.43 million active clients, down 18.6% YoY but representing a slower rate of decline compared to recent quarters. Net revenue per active client rose 4.9% YoY to $531. Gross margin expanded 180 basis points to 45.4%, which the company attributed to improved transportation leverage and product margins. The company delivered net loss of $6.3 million. Adjusted EBITDA was of $13.5 million, which reflects continued cost management discipline. Net cash provided by operating activities of $14.3 million and free cash flow of $9.9 million in the first fiscal quarter. The company ended the quarter with $253.3 million of cash, cash equivalents, and investments; and no debt. During the first quarter of fiscal 2024, the company ceased operations of the UK business and met the accounting requirements for reporting the UK business as a discontinued operation.

Meanwhile, the introduction of more personalized marketing and engagement tactics has increased client visits and driven sales across both fixed and freestyle channels. The company’s new private label brands, The Commons and Montgomery Post, have shown encouraging early results, with The Commons becoming a top 10 brand for men under 40.

SFIX in the third quarter of FY 24 has reported the adjusted loss per share of 5 cents, beating the analysts’ estimates for the adjusted loss per share of 14 cents. The company had reported the adjusted revenue decline of 12.6 percent to $318.8 million in the third quarter of FY 24, beating the analysts’ estimates for revenue of $307.04 million.

For the fiscal second quarter, Stitch Fix forecast revenue between $290 million and $300 million, ahead of the $283.6 million consensus estimate. Stitch Fix maintained its full-year fiscal 2025 revenue outlook of $1.14 billion to $1.18 billion. The company continues to expect a return to revenue growth by the end of fiscal 2026. The company expects both the second quarter and full fiscal year 2025 gross margin to be approximately 44% to 45%, and full fiscal year 2025 advertising expense as a percentage of revenue to be at the high end of an 8% to 9% range. The company expects Q2 to be free cash flow negative due to the timing of working capital requirements related to inventory purchases.