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The 9.4% revenue growth was driven by a 9.8% increase in fax average order value, reflecting the success of larger fax formats and more premium ordering.
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Management attributed the market share gains to a ‘high touch’ approach in the fix channel, where double-digit growth in both the men’s and women’s segments fueled a broader contraction of the US apparel market.
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The company identified a $1 billion incremental revenue opportunity within its existing customer base by expanding into high-demand categories such as footwear, accessories, and activewear.
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Strategic optimization of the brand mix, combining recognized national brands with data-driven private brands, led to private brand revenue growth exceeding 35% for key labels.
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The integration of AI tools, such as the ‘Vision’ styling platform, has driven 100% lift in Freestyle by providing engaged users with personalized head-to-toe imagery for over 90 days.
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Operating profit was maintained through a disciplined promotional strategy, using Freestyle’s unique capabilities to protect margins while driving holiday record sales.
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Management expects to achieve positive sequential net active customer additions in Q3, marking an important inflection point in the methodical recovery of their customer base.
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Revenue growth is expected to moderate in the second half of fiscal 2026 as the company unusually outperforms average order value comparisons on a year-over-year basis.
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The fiscal outlook takes a cautious stance on potential headwinds from consumer sentiment and non-discretionary spending pressures, such as rising gas prices.
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The long-term strategy focuses on returning to active customer growth year-over-year through fiscal 2027 through improved retention and high-LTV new customer acquisition.
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Guidance for the rest of the year reflects continued confidence in recent improvements to the customer experience and continued scaling of AI-driven engagement features.
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Revenue per active customer reached $577, the highest level since the company’s IPO, indicating deep capture of wallet share.
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The company reported its eighth consecutive quarter in which the contribution margin exceeded 30%, demonstrating continued operating efficiency during this turnaround.
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Management noted a 75% year-over-year increase in client mentions of weight loss, positioning the service as the primary solution for consumers seeking body changes through GLP-1 medications.
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Inventory levels increased 11.4% year-over-year to support strategic investments to expand in order and meet growing consumer demand.
