Good day, and thank you for standing by. Welcome to the Q3 FY '25 Stitch Fix Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to conference over to your speaker today, Cherryl Valenzuela, Head of Investor Relations. Cherryl

Thank you for joining us today for the Stitch Fix Third Quarter Fiscal 2025 Earnings Call. With me on the call are Matt Baer, Chief Executive Officer; and David Aufderhaar, Chief Financial Officer. We have posted third quarter 2025 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. On today's call, Matt and David will share their prepared remarks. We will then move to Q&A before concluding with Matt's closing remarks. Before we begin, 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. For a discussion of the factors that could cause our results to differ, please review our press release issued and filed today as well as the Risk Factors sections of our most recent quarterly report on Form 10-Q and subsequent periodic reports filed with the SEC. 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 begin to report our U.K. business as a discontinued operation. Accordingly, all metrics discussed on today's call represents 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 Matt.

Thank you, Cherryl, and good afternoon, everyone. I'm proud to share the strong results we've achieved this quarter, highlighted by a return to year-over-year revenue growth. Q3 revenue was $325 million, and adjusted EBITDA was $11 million. In the quarter, our Women's business and overall Fix channel returned to revenue growth. For the second consecutive quarter, our Men's business and Freestyle channel revenue grew. In addition, AOV grew 10% with items per Fix, keep rate and AUR, all up year-over-year for the second straight quarter. Based on this strong performance and our ongoing momentum, we are increasing our annual guidance for the current year, which David will detail shortly. These results reflect the strength of Stitch Fix's value proposition and the disciplined execution of our 3-phased transformation strategy. Over the last 2 years, we have worked through the first 2 phases of our strategy, rationalize and build, and fundamentally reshaped how we operate. We've strengthened the foundation of our business, incorporating retail best practices in strategic areas such as pricing, warehouse optimization and inventory management that enable us to operate more efficiently. We've also brought to life a more modern and dynamic Stitch Fix through our refreshed brand identity and the progress we have made reimagining our client experience. The improvements to our client experience includes 4 areas of focus: enhancing client engagement features, deepening client-stylists relationships, introducing increased flexibility to our service and offering a stronger assortment with more fresh and new styles. The latter 2, in particular, contributed to our strong results in the quarter. First, our clients are responding positively to the increased flexibility we provide. Larger fixes, which offer up to 8 items, have helped our existing clients better refresh their closets seasonally, explore current trends and update their wardrobes for big and small life moments. Larger fixes have directly contributed to our AOV growth. We are now testing larger fixes with first-time clients to help us more quickly understand their preferences and serve them better from the start. We're also testing theme fixes, which provide clients with selections curated for specific occasions or trends from summer vacations to workwear refreshes. Additionally, we're rolling out a new feature that allows clients to start to a Fix around an item they discover on Freestyle. This enables clients to take advantage of the discovery on Freestyle, but still leverage our team of expert stylists to complete a look around their chosen item. Second, in merchandising, we have strengthened our assortment by offering increased variety in on-trend styles, which are contributing to higher Fix AOVs as well as driving growth in our Freestyle channel. This quarter, athleisure was a notable highlight for our Women's and Men's clients alike, up over 30% year-over-year. In addition, our Women's business saw strength in wide leg denim and spring transitional sweaters, whereas our Men's business saw demand for fleece and knit tops. We have also further expanded our assortment within adjacent categories such as footwear, accessories and jewelry, and we are offering more complete outfitting solutions that are resonating with our clients. As an example, we continue to see increased demand for footwear across all lines of business with sneakers up 35% year-over-year. These efforts to improve the client experience coupled with our retail therapy brand platform, which demonstrates how Stitch Fix is the solution to the frustrations of traditional apparel shopping are leading to stronger client metrics. In terms of overall active clients, Q3 marked our lowest quarter of sequential declines in 3 years, and the number of active clients on recurring shipments has grown for 3 straight quarters. With regards to new clients, we've achieved 2 straight quarters of year-over- year new client growth. We continue to see new clients spend more as evidenced by 90-day LTVs, which are among the highest in 3 years. This demonstrates that we are successfully acquiring higher-value clients for whom our service resonates. As we move from the build phase into the growth phase of our transformation, we're focused on cementing ourselves as the retailer of choice for apparel and accessories by delivering the most client-centric and personalized shopping experience. We believe we are well positioned to do this because of the unique value our service provides. We pride ourselves on sending every client a Fix as unique as they are. We do this by leveraging our team of expert stylists as well as our best-in-class AI and recommendation algorithms built from the billions of insights we've gathered on style and fit. This differentiation is key to us gaining market share and based on year-to-date insights from Circana, we are growing faster than the overall apparel market. We are successfully transforming our business in fundamental ways. At the same time, we are navigating significant external challenges, a dynamic macroeconomic environment, a shifting tariff landscape and ongoing pressure on consumers' discretionary spending. Against this backdrop, we remain focused on what we can control, and we have strong conviction in our path forward. Our team is actively working to mitigate tariff-related risks and prepare for broader macro shifts. As we look further ahead, we believe the current tariff structure could have a greater impact on FY '26, which for us begins in August. However, consistent with our view last quarter, we don't expect any significant cost impact from tariffs for the remainder of our fourth quarter. In closing, we're proud of our accelerated return to revenue growth. We believe our results demonstrate that we have the right strategy, the right team and the right operational rigor to continue gaining share. By staying relentlessly focused on our clients, investing where it matters and executing with discipline, we believe we will not only successfully navigate this uncertain environment, we will emerge as an even stronger company. Thank you to the entire Stitch Fix team for your dedication to our clients and our mission, which is driving our business forward. I'd also like to thank our clients, partners and long-term shareholders for their support. And with that, I'll turn it over to David.

Thanks, Matt, and good afternoon, everyone. As Matt mentioned, we are proud of our return to revenue growth in Q3. This success came as a direct result of focused delivery across all of our teams. We have made deliberate choices about how to operate with more agility, drive greater leverage in our cost base and invest in targeted areas to drive growth. At the same time, we recognize the macroeconomic backdrop remains uncertain, and we are preparing accordingly. While we haven't seen a pullback in active client spend within our financial results in fiscal '25 to date, we are closely monitoring broader market trends and the impact tariffs may have in the quarters ahead. We are actively scenario planning and maintaining the same disciplined approach that has guided our recent performance. We are confident in the foundation we have built and remain focused on prudently managing our business through this uncertain environment. Now let's turn to the numbers. Q3 net revenue reached $325 million, up 0.7% year-over-year and 4.1% quarter-over-quarter. Growth was largely driven by strength in AOV due to the increased penetration of our larger Fix offerings and our focus on trend and style right assortment. Net active clients ended the quarter at 2.4 million clients, down 10.6% year-over-year and down 0.8% quarter-over-quarter as we continue to narrow losses in active clients. Revenue per active client for the quarter was $542, up 3.2% year-over-year and up 1% quarter-over-quarter. Gross margin for the quarter came in at 44.2%, down 130 basis points year-over-year and down 30 basis points quarter-over-quarter. The year-over-year change was driven primarily by lower product margins as we invest in our client experience through our assortment strategy. Advertising came in at 10.2% of revenue in Q3, up 130 basis points year-over-year and up 240 basis points quarter-over-quarter as part of our broader reinvestment in growth. We ended Q3 with net inventory of $114.4 million, flat year-over-year and up 4.4% quarter-over-quarter. Our inventory turns were up both year-over-year and sequentially, reflecting both higher demand and better inventory management. Q3 adjusted EBITDA was $11 million or approximately 3.4% margin, up 130 basis points year-over-year and down 170 basis points quarter-over-quarter. We generated $16 million of free cash flow in Q3 and ended the quarter with $242 million in cash, cash equivalents and investments and no debt. Turning to our outlook for Q4 and FY '25. I'd like to offer a few thoughts to frame our updated guidance. First, with respect to revenue, we exceeded expectations in Q3, and we are projecting a stronger Q4 than previously anticipated. Both of these are reflected in our increased full year revenue outlook. This means that excluding last year's 53rd week, we expect to see a second consecutive quarter of top line growth. Consistent with what we shared on our last earnings call, we still expect active clients to decline sequentially in Q4. As for adjusted EBITDA, we are tightening our FY '25 guidance, which largely reflects strategic investments we're making in client acquisition and reengagement as well as strengthening our assortment. We believe these are thoughtful, long-term investments to support sustainable growth. As a result, for full year FY '25, we now expect total revenue to be between $1.254 billion and $1.259 billion. We expect total adjusted EBITDA for the year to be between $43 million and $47 million. This guidance still assumes we'll be free cash flow positive for the full year. And for Q4, we expect total revenue to be between $298 million and $303 million. We expect Q4 adjusted EBITDA to be between $3 million and $7 million. As a result of the factors I mentioned earlier, we expect Q4 gross margin to be at the lower end of our 44% to 45% range and full year FY '25 gross margin to be in the middle of that same range. We expect full year advertising to be at the high end of the 8% to 9% range we provided last quarter. Looking further ahead, we are in the early stages of the planning process for FY '26. And as such, we'll provide actual guidance during our next earnings call. As we move through the planning process, we're mindful that 3 overarching impacts may put pressure on our financial results. First, based on current tariff rates, we expect our cost to increase in FY '26. We are closely monitoring the situation and proactively working with our suppliers. Second, broader macro uncertainty and market conditions may put increased pressure on discretionary spending in FY '26. And third, as we called out last quarter, continued active client declines creates tougher year-over-year revenue growth comparisons. We will continue to monitor each of these as we progress through the planning process. I want to reiterate that we'll manage the business with the goal of driving long-term profitable and sustainable growth that includes growth in both active clients and revenue per active client. While the macroeconomic environment is out of our control, how we plan and execute is in our hands, and that is where our focus continues to be. We're operating at scale with a strong financial foundation and a uniquely agile business model, anchored by a debt-free balance sheet, proprietary data science and AI, and the ability to quickly adapt our marketing, merchandising and pricing levers. We believe these attributes put us in a position to navigate challenges and continue to deliver strong results. With that, operator, we can open the line for Q&A.

[Operator Instructions] Our first question comes from Dana Telsey with Telsey Advisory Group.

Nice to see the progress. As you think about the current quarter that just ended with the Women's and Fix channel returning to growth along with Men's and Freestyle continuing to grow, what did you see in the core consumer? What did you see in terms of keep rates? And as you think about the go forward into the fourth quarter guidance that you just gave, have you seen any shifts in terms of consumer behavior and in product category acceptance? And then just lastly, on the gross margin, where you described the fourth quarter gross margin at the lower end of the range, can you just go through the puts and takes? And also, what could tariff implications mean for you?

Dana, it's Matt. I'll speak a little bit about the performance from Q3 as well as the factors, the Q4 guide. I'll let David give some additional context and also speak to the gross margin question. And then I'll come back to lead an answer on your third question about tariffs. But we're really proud of the accelerated return to year-over-year growth that we just delivered this quarter, also confident in the Q4 guide that we gave that shows that we'll have a second consecutive quarter of growth. And it reflects the resonance of our core value proposition. It also represents the disciplined execution of our transformation strategy. As we've shared previously, in August, we introduced a set of changes to our client experience and also a new brand identity for the business. And as we shared previously as well, since then, nearly every initiative that we've introduced as part of that reimagination, the client experience has performed well and exceeded expectations. So the performance for Q3 and the guide for Q4 are largely driven by similar factors. Specifically, a primary driver of growth in Q3 was the continued strength in average order value. Average order value is up 10% year- over-year. That was the seventh consecutive quarter of average order value growth for us. And we also shared that we saw strength across both more items for Fix, keep rate and AUR. The drivers of those metrics is the introduction of the greater flexibility in our Fix option as shared in the prepared remarks, particularly the larger fixes that now have up to 8 items in them. It's clearly resonating with our clients, and is helping to drive engagement with them and stronger business results. Another factor is how we've continued to infuse newness into our assortment. We've also expanded more into non-apparel categories. These are paying off and leading to better keep rates and higher AUR, as you asked. We've also seen strength, as you noted, across almost all of our lines of business, the positive year-over-year revenue comps for Women's and Men's. And in addition to our Fix channel returning to growth, the Freestyle channel grew again for a second consecutive quarter. And finally, I think it's really important to also take note that we've achieved a second consecutive quarter of year-over-year growth in new clients. And those new clients are spending more and opting into recurring shipments at a higher rate. And that speaks to the increasing client satisfaction and engagement. This is driven in large part by the retail therapy brand platform that we launched, and we've spoken about previously. We're doing a really good job at targeting clients, which our service will resonate best with. And by doing so, we're focusing on the quality of that client acquisition, not just the quantity of the new clients that we bring into the service. And these aren't one-off wins. These improvements are deeply rooted in the fundamental reshaping of our operations, the strategic investments that we've made during the rationalize and build phases of our transformation. And we're carrying over that momentum, which we believe will endure as we transition into that growth phase of our transformation. David, if you want to add additional color and anything on gross margin?

Yes. Just one more point on the quarters, like when we think about Q4, one of the other call-outs that I think we called out last time is there is just normal seasonality in active clients. So what Matt was calling out is really important that there's both sort of the active client side and the client engagement side. And so we expect, just from a seasonality standpoint, to have a slightly higher sequential loss in the quarter. This quarter, we were down quarter-over-quarter about 1%. Roughly, we expect next quarter to be around down 2%, but still really confident in the continued growth from a revenue standpoint. And that's because of what Matt was alluding to, the AOV strength that we've seen this quarter is something that we're very confident in. And we actually see that strength continuing in May. And so that's definitely something that's encouraging that we're seeing. From a gross margin perspective, definitely, gross margin, it was at 44.2% this quarter. It's a little bit down quarter-over-quarter. Really, margins are going to fluctuate quarter-over-quarter as we mix shift between market brands and private brands. Matt touched on leaning into newness in some of those non-apparel categories. Some of that mix shift might have an impact on gross margin. But I think it's also really important to call out contribution margin. That's one of the reasons we've been talking about that a lot the last couple of quarters is really driving leverage in our operations. Contribution margin was above 33% again this quarter. And that really gives us the flexibility to be able to do what's client right from an assortment standpoint, even if that has a little bit of a headwind on gross margin. And that's what's included in our guide for the quarter.

Yes. And Dana, on the third question, we're taking a proactive approach, and we're facing external headwinds head on. Our view is that you don't win market share by playing it safe. And we'll continue to closely track any changes in trade policy. We're going to adjust as needed in order to mitigate any risk to our business. And if current rates persist, it will create headwinds. But as noted, I'm confident that we're well prepared to navigate this and to even strengthen our market position through that process. I believe this for a few reasons. The first is that our value proposition, it resonates even in a challenging macro environment. Clients come to Stitch Fix for the personalized styling, the convenience, the discovery of the items that they love, and it inherently offers additional value and protects our business from any pure price comparison shopping. Further, the strong and enduring relationships that a client and stylists have, really allows us to tailor the experience to each individual client and adjust to their budgets at any moment in time. The second, and as we discussed on the last call, as a multi-brand retailer, we have a significant advantage in navigating any market and policy shifts. We can strategically adjust our brand matrix mix to minimize any impacts. And what's more, our strong private brand portfolio is robust and most of our vendors have production facilities across multiple countries, which allows them to pivot quickly, helping to limit any long-term effects. Third, our rich data and advanced AI capabilities also help inform our merchandising strategy, helps us predict demand. It helps drive our buying decisions, and it also helps improve our private brand design process. Finally, we believe that the work we've done in the first 2 phases of our transformation are really important assets for us. We've already driven significant internal operational efficiencies. And as David noted, with our contribution margin north of 30% for a fifth consecutive quarter, it gives us a lot of flexibility in terms of how we would deal with any macro pressures or external pressures. So all of these factors, our core value proposition, our distinct business model and the work we've done in the first 2 phases of our transformation, that gives us confidence that we can emerge stronger and continue to gain market share.

Our next question comes from Aneesha Sherman with Bernstein.

Congrats, Matt and David. So Matt, I just -- my first question is a follow-up on your comments that you just made. You talked about the value proposition resonating in a tougher macro environment. Could the current macro be a potential share gain opportunity for you? And if so, what are you doing differently to communicate that value proposition to consumers and kind of take advantage of that opportunity in this current macro? And then a follow-up on the tariff side. So you talked about a couple of different levers to mitigate the tariff impact. You talked about working with suppliers, some mix shifts and category national brands. Are you also considering pricing as a potential lever? And can you talk a little bit more about that if you are?

Aneesha, yes, happy to answer those questions and appreciate the recognition for the return to growth. In terms of our approach during a tough environment, we absolutely believe that this is an opportunity for us to gain share. The service that we offer is one that we can tailor to the exact needs of an individual at any time. The information that we have in terms of the budget implications for our clients allows us to shift in terms of how we're interacting with them, which items of clothing we're sending, how we're approaching different pricing messages as well with our clients. And we also feel really strongly that the relationship that clients and stylists have gives us a leg up over any potential competition in terms of where clients are going to go when they need their apparel and accessories. As someone who styles clients like I do, I know just how strong those bonds can become. And I know that in times of need that I feel confident that clients are going to come to us for those needs based on our ability to be adaptive and responsive to them at any given moment. What I also know that is really working well for us, it's how we've continued to adapt the messaging when we go out to market, both to speak -- both for new client acquisition as well as to speak to our current clients. And we've really made it clear to them the value that we offer in these environments. And during this time, we save our clients' time, we add convenience back into their daily lives and we can create value for them, both in our assortment and our service. So we are very confident that we can gain share in a more challenging macro environment. The quick add-on from the question that you had in terms of tariffs, we don't anticipate taking any price increases during the balance of our fiscal year and feel really confident in the work that our team has done in order to mitigate any potential cost increases into the future and feel really strong about the resonance of our service, such that that's not an expectation for us going forward. And we'll continue to see where the macro environment plays out. And we'll continue to make sure that what we do is create value for our clients that also enables us to drive positive and strong business results.

Yes. And just to add one point to that, Aneesha. I mean, I think to Matt's point, under the current tariff conditions, yes, we would expect to see an increase in merchandising costs in FY '26. But as a multi-brand retailer, I think we're really well positioned to really work with our partners, both from a country of origin diversification as well as just ongoing negotiations to mitigate that as much as possible. And so that's the way that we're looking at it, and we'll provide more information next quarter as well.

Our next question comes from Dylan Carden with William Blair.

I'm just curious, you've spoken historically about kind of a lag effect in your business as you acquire customers, and they repeat over a period of time. I mean, the line of sight -- can you share anything as to the line of sight that you have at this point as you start to grow new customers as to when you might start growing total active customers?

Yes. Dylan, I appreciate the question. I'll answer and David, if you want to add any additional context to that. For us, as we've approached how we go out to market to acquire new clients, we're very much focused on quality over quantity. We're really focused on clients that are going to deliver a high lifetime value for us that help us ensure that the investments that we're making into acquisition have the highest possible return on investment. That's why we're really proud about the lifetime value that we're seeing in the first 90 days from new clients that we acquire and the strength that we continue to see in that being some of the highest metrics, the highest performance over the last years. And even though we have a focus on quality, we've still delivered new client growth over the last 2 quarters. We've also continued to see strength in reengagement and had a lot of success reengaging clients that were previously customers of Stitch Fix, which continues to pay dividends for us. And we're also seeing strength in terms of our dormancy rate as well. So I feel really confident that in the future we will return to active client growth. Our focus right now is making sure that we have the best quality clients that we have, that we're maximizing wallet share with our current clients and that we're delivering the highest lifetime value with those clients. And you see that with the engagement metrics and the really strong performance. And I think it ultimately manifests in both the return to growth in our third quarter as well as our guide to continued growth in the fourth quarter.

And then, Dylan, just to add a couple of points. For FY '26, outside of macro impacts, we would still expect a quarter-over-quarter increase in active clients at some point in FY '26. And to Matt's point, that continues to be our focus. With that said, macro uncertainty and market conditions may create some headwinds, and we'll provide more of an update. On the other part of your question around sort of the lagging part, we used to talk about this where revenue can sometimes lag client growth. And certainly, as we get to that inflection point, that's certainly going to be a tailwind where revenue in a client within maybe the first quarter that we have them isn't as high as that sort of recurring second shipment and third shipment. And so you tend to see more of that value over time. What's been interesting over the last year, though, that I think we've been talking about more and more is both sides of the equation from a revenue standpoint is, yes, long-term sustainable growth is both about active client growth and revenue per active client. But what we've been seeing in the last few quarters has been really a lot of strength in that client engagement with AOV up significantly for the past 7 quarters. And so really getting to both of those things continues to be our focus.

[Operator Instructions] Our next question comes from David Bellinger with Mizuho.

Matt, David, I wanted to follow up on AOV. I think you mentioned up 10% in the quarter, something like 7 consecutive quarters of AOV growth. Could you just unpack that a little bit for us? Are we seeing broader increases across the business? Or is this a structural shift where you're seeing more units per Fix? Just trying to unpack this and can you talk to the sustainability of these AOV increases over the next several quarters or even into next year?

David, I appreciate the question. David, do you want to go ahead and I'll add any additional context?

Yes. David, a couple of call-outs. Certainly, in this quarter, a big part of the AOV increase is those larger fixes that we've talked about. Those are really resonating with our clients where we're adding the flexibility to offer them, not just 5 items in a Fix, but 6, 7 or 8 items. And that's really, really resonating with our clients. From Q1 to Q3, the penetration of our fixes that have larger fixes has more than doubled. And so that's been a big part of the AOV increases. And we do see that momentum continuing into May. And so we do believe that there is continued upside in gaining wallet share from our existing clients. It continues to be a focus both for our marketing teams, for our product teams, for our stylists to make sure that we're providing different touch points with every client to drive value, and that's really why we see that sort of increase from an AOV perspective. The one call-out I would say on AOV is as we go into FY '26, certainly, this strength will create tougher comps in FY '26 and probably create tougher comps as we move through FY '26, just because of the strength that we've seen this year. Like if you think about this quarter, it's not just about the 10% increase this quarter. If you get like -- if you look at a 2-year stack of Q3, it's a 17% increase in AOV. And so definitely more upside that we're driving towards, but some tougher comps next year.

Yes. Got it. That's very helpful. And then I wanted to follow up too on the ad spend. So the increase as a percent of sales this quarter, I think on a year-over-year growth rate, the dollar basis was up double digits. You still got active customers down. So can you tell us, is it getting more expensive to keep your customer base? And what do you need? Should we see another step up in ad spend or different channel mixes? What do you need exactly to drive that new customer growth again?

Yes, David, I'll start and then Matt, if you want to provide any color. First, I don't think we need to increase ad spend to get to an active client growth. I think we've touched on this maybe 2 quarters ago, where we definitely see some good signs from a new client acquisition. It's the second quarter in a row that new client acquisition is up. We see client reengagement is up again and is in a very healthy place. And even on the dormancy side, those are the 3 components to active clients. And dormancy trends are getting better as well. And so with our existing product road map and existing marketing levels of investment, we feel comfortable outside of, obviously, the macro uncertainty that we see an inflection point in FY '26. And so I don't think we need to increase ad spend. The caveat to that is one that I used to say, I think, almost every quarter, which is we have a methodology around our ad spend and where we see opportunity to lean in we do. We have a CAC-to-LTV. Certainly, with the health of our clients recently, LTV is up and that makes us feel more comfortable about leaning in. I think the other call-out for ad spend is there is seasonality there, and that's where it gets a little bit lumpy, where Q1 and Q3 tend to be stronger quarters from a client acquisition standpoint for us. And so we tend to lean in a little bit more from a percent of revenue in those quarters than we do in Q2 and Q4.

I would now like to turn the call back over to Matt Baer for any closing remarks.

Okay. Thank you. So to close, I want to reiterate just how proud I am of the results that the team delivered this quarter, including our return to year-over-year revenue growth, that's a significant milestone in Stitch Fix's transformation. We know many people are dissatisfied with retail today. Traditional apparel shopping, it's broken. And Stitch Fix has always been focused on fixing it. And our transformation has always been grounded on fully realizing that vision. And as the return to growth this quarter demonstrates, it's working. And we've improved our business in fundamental ways through the rationalize and build phase of our transformation. As part of this, we've created a much more modern and dynamic client experience, and we're seeing the results of our collective efforts in our numbers and how we are gaining share in the market. We believe these improvements we've made will also enable us to successfully navigate an increasingly challenging macro environment. As we enter the growth phase, we will continue to operate with rigor and an unrelenting focus on delivering the best possible experience for our clients. In doing so, we aim to cement ourselves as the retailer of choice for both our current clients as well as a far larger base than we currently reach today. The momentum of the Stitch Fix business is undeniable. I'm more confident than ever in our future. I appreciate your interest in our business, and I look forward to sharing our continued progress in the future. Thank you.

This concludes the conference. Thank you for your participation. You may now disconnect.