Stitch Fix, Inc.

Good afternoon, and thank you for standing by. Welcome to the first quarter fiscal year 2024 Stitch Fix earnings call. At this time, all participants will be in a listen-only mode. After the speaker's presentation, you will be invited to participate in a question and answer session. To ask a question during the session, please press star 1-1 on your telephone. You'll then hear an automated message indicating your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Hayden Blair.

Good afternoon, and thank you for joining us today for Stitch Fix First Quarter Fiscal 2024 Earnings Call. With me on the call are Matt Baer, Chief Executive Officer, and David Alkerhar, Chief Financial Officer. We have posted complete First Quarter 2024 financial results in a press release on the quarterly results section of our website investors.stitchfix.com. A link to the webcast of today's conference call can also be found on our site. We would like to remind everyone that we will be making forward-looking statements on this call, which involve risks and uncertainties. Actual results could differ materially from those contemplated by our forward-looking statements. Reported results should not be considered as an indication of future performance. Please review our filings with the SEC for a discussion of the factors that could cause the results to differ. In particular, our press release issued and filed today, as well as the risk factors sections of our annual report on Form 10-K for our fourth quarter and full year 2023, previously filed with the SEC, and the quarterly report on Form 10-Q for our first quarter 2024, which we expect to be filed later this week. Also note that the forward-looking statements on this call are based on information available to us as of today's date. we disclaim any obligation to update any forward-looking statements except as required by law. During this call, we will discuss certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are provided in the press release on our investor relations website. These non-GAAP measures are not intended to be a substitute for our GAAP results. In the first quarter of fiscal 2024, we met the requirements to report our UK business as a discontinued operation. Accordingly, all metrics discussed on today's call represent our continuing operations. Finally, this call in its entirety is being webcast on our investor relations website, and a replay of this call will be available on the website shortly. And now, let me turn the call over to our CEO, Matt Baer.

Thanks, Hayden. Good afternoon. I'm pleased to share that Q1 revenue came in at the high end of our guidance, and we outpaced our guidance on adjusted EBITDA. as a result of the work we are doing to manage the business to profitability. While these results are encouraging, there is much more work to be done to change the trajectory of our business. We began the fiscal year carefully assessing all areas of our company to identify impactful opportunities to transform our operations and improve our performance, and that work is ongoing. All that I've learned and observed in my first five months as well as my experience in retail over many years has reinforced my conviction in our company's ability to deliver sustainable, profitable growth. The original vision of Stitch Fix is as powerful, as relevant, and as compelling today as it was when it launched. Over the last 12 years, we have served millions of clients with a more innovative and more convenient way to shop for apparel and accessories. And new technology is making it possible for us to take personalization to a new level. To ensure that we continue to fully realize our vision into the future, we must think differently, work differently, and approach our business differently. And we have already begun to do that with three significant bodies of work. First, we are strengthening our foundation in embedding retail best practices throughout the organization. Second, we are building a healthier client base by more precisely targeting high lifetime value clients that we expect will help us expand our client base over time. And third, we are developing a long-term strategy to better serve the clients we have today and those we intend to attract in the future. We have begun to embed retail best practices that are already changing the way certain choices and decisions are being made. We will make operational excellence the standard for everything we do, and we will ruthlessly prioritize how our teams are spending their time. This approach is intended to be comprehensive, from merchandising and pricing science to transportation and warehouse operations. And to ensure a high degree of rigor and accountability, we have a dedicated team in place to drive efficiency across the organization and transform the way we operate. This may not be headline grabbing, but it is exactly the work that we need to be doing right now. And we believe it will fuel our ability to deliver sustainable, profitable growth. We saw encouraging results in Q1 as we continue to strengthen our foundation and apply those retail best practices across a number of functions. Let me share a few examples. In merchandising, we began to establish best-in-class buying, assortment planning, and inventory allocation strategies, and we increase our focus on private brands. We expect it to improve operational efficiencies, grow margin, and ensure we have the right product in the right location at the right time to best serve our clients. Our private brands play an outsized role in improving both client outcomes and profitability. Over the last few years, we have increased our private brands from approximately one-third to nearly 50% of total sales. Because these brands perform well, generating higher keep rates and margins, we plan to emphasize them in our assortments moving forward. We also continue to refine our brand portfolio in order to better serve our clients, unlock greater operational efficiencies, and build deeper relationships with national brand partners. Over the last two quarters, we have reduced the number of brands, and we will continue to assess brands and optimize categories to deliver newness and trend while also driving growth. In technology, we continue to advance a broader set of generative AI initiatives. As one example, we launched a generative AI-enabled tool that makes it easier and more efficient for stylists to personalize the notes clients receive within their fixes. Through the use of this tool, notes are informed by a client's prior purchase history and reflect item-specific descriptions and selling points. This lets us deliver a more robust experience to clients at a lower cost to serve and lets stylists redirect their time to conduct deeper analysis of client profiles, curate the best possible fixes, and spend more time building relationships with clients. We also continue to scale the use of our AI buying tool, which helps to drive more informed decisions and fresher assortments. We already see improved keep rates in the initial phase, and we expect this tool to be utilized in more than 50% of all units ordered by the end of fiscal year 2024. In our product and technology organizations, We welcomed seasoned leaders with experience at Amazon Fashion, eBay, Airbnb, and Nike to solidify and advance these teams. Headlining the addition is Tony Bacos, who joined the company a few weeks ago as Chief Product and Technology Officer. He brings tremendous subject matter expertise, sharp business acumen, and exceptional product instincts, as well as an impressive track record of delivering results. We will assess opportunities to advance all of our teams across the organization, carefully evaluating structure and capabilities to ensure that our workforce is aligned to our strategic objectives. We have strong talent in the company, and our teams have been stepping up nicely in response to new leadership, new objectives, and new expectations. Speaking to the long term, development of the strategy is progressing well. And we are already transforming our ways of thinking and working. We can and plan to seize the opportunity to methodically widen the aperture of target client segments and introduce many more people to the convenience and benefits of personalized styling. And we plan to radically reimagine the client experience to firmly position and differentiate Stitch Fix within the retail landscape. As the best practices and operational efficiencies I described take hold, I believe we will have a much stronger foundation to build upon. I look forward to sharing more about our strategy in the future and the specific ways we plan to innovate for our clients, drive growth for our business, and create value for our shareholders. The past five months have given me a solid grounding in where our business is today, a clear understanding of the current obstacles, and increased conviction about the path to return to profitable growth. I'm confident that the work we are doing now is essential to setting Stitch Fix up for future success, and I want to thank our teams for their ongoing commitment to our clients, their openness and enthusiasm around new ways of working, and their belief in the bright future of our company. With that, I'll turn the call over to David, who will speak to our Q1 financial results and future outlook.