Here's Why You Should Add Stitch Fix Stock to Your Portfolio

Stitch Fix, Inc. SFIX has been steadily carving out a unique niche in the apparel retail space by blending data science with personalized styling. Despite lingering concerns around discretionary spending, the company’s improving operational discipline and expanding AI-driven capabilities position SFIX as an attractive turnaround play. With signs of stabilization in active clients and margins, the stock presents a compelling opportunity for investors.

SFIX’s AI-Driven Personalization With RPAC and AOV Growth

Stitch Fix’s generative AI–driven visualization experience is reshaping how clients discover fashion by offering personalized, shoppable visuals aligned with individual style profiles and current trends. Alongside this, the AI-powered style assistant engages clients through natural, conversational interactions, helping them more clearly communicate preferences to stylists. Drawing on each client’s style data and continuously learning through use, the assistant steadily improves accuracy, delivering more precise and personalized outcomes over time.

Stitch Fix is also deploying AI across the enterprise to enhance efficiency and reinforce its position as a retail innovator. The company is using proprietary data to transform its private brands through improved trend forecasting, inventory optimization, and intelligent pricing. Generative AI is embedded throughout core operations, particularly in merchandising, where it is reshaping private-label product development and inventory management. AI-assisted design enables faster responses to emerging trends and quicker time to market, while predictive intelligence supports smarter inventory and pricing decisions that balance profitability with client satisfaction.

Platform flexibility has also expanded through the introduction of dynamic, larger fixes, the ability to convert Freestyle shopping journeys into styled fixes, and curated, theme-based fixes tailored to specific occasions and use cases. The rollout of family accounts broadens access to the Stitch Fix experience across households and supports seasonal gifting. In addition, Stylist Connect enables near real-time collaboration between clients and stylists, reinforcing a highly customer-centric model that continues to resonate strongly.

Stitch Fix delivered continued progress in monetization, with Revenue per Active Client (RPAC) rising for the seventh consecutive quarter to $559, reflecting a 5.3% year-over-year increase in the fiscal first quarter of 2026, and ended the quarter with 2.3 million active clients, at the high end of management’s expectations. This sustained improvement indicates that clients are spending more per relationship, reinforcing the company’s ability to deepen engagement and capture a higher share of wallet from its existing base.

Average Order Value (AOV) rose nearly 10% in the fiscal first quarter, marking the ninth consecutive quarter of year-over-year growth. This sustained momentum reflects strong client adoption of larger fix offerings and a more curated assortment that better meets outfitting needs while driving higher value per order.

The Zacks Rundown for SFIX

SFIX’s shares have gained 18% in the past three months compared with the industry’s rise of 18.2%. SFIX presently carries a Zacks Rank #2 (Buy).

From a valuation standpoint, SFIX trades at a forward price-to-sales ratio of 0.49, lower than the industry’s average of 2.07, highlighting a meaningful discount. The discounted valuation suggests there is meaningful room for the stock to grow if business performance improves or sentiment turns more constructive.

The Zacks Consensus estimate for SFIX’s current year and next year earnings per share has improved by 3 cents and 4 cents, respectively, in the past 60 days.

Other Stocks to Consider

Some other top-ranked stocks have been discussed below:

Five Below, Inc. FIVE operates as a specialty value retailer in the United States. At present, Five Below sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for FIVE’s current fiscal-year sales and earnings implies growth of 19.9% and 15.9%, respectively, from the year-ago figures. ULTA delivered a trailing four-quarter earnings surprise of 62.1%, on average.

Ulta Beauty, Inc. ULTA operates as a specialty beauty retailer in the United States, Mexico, and Kuwait. At present, Ulta Beauty flaunts a Zacks Rank of 1.

The Zacks Consensus Estimate for ULTA’s current fiscal-year sales and earnings implies growth of 9.6% and 0.7%, respectively, from the year-ago figures. ULTA delivered a trailing four-quarter earnings surprise of 15.7%, on average.

Victoria’s Secret & Co. VSCO operates as a specialty retailer of women's intimate apparel and other apparel and beauty products worldwide. At present, VSCO sports a Zacks Rank of 1.

The Zacks Consensus Estimate for Victoria's Secret’s current fiscal-year sales indicates growth of 4.2%, and earnings indicate a decline of 2.2% from the year-ago figures. BOOT delivered a trailing four-quarter earnings surprise of 55.5%, on average.

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This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research