Reformation's AI Planning Tool Lifts In-Stock Rates as Q3 Revenue Rises 19%

Reformation's Q3 net revenue grew about 19% year over year to $173.6 million, and CEO Hali Borenstein credits a new AI-backed planning tool with improving how the brand evaluates product performance and forecasts demand. The tool strengthens in-stock rates and full-price selling, Borenstein told analysts on an earnings call Thursday.

The apparel brand, which began trading as a public company in July, also spotted a consumer shift ahead of Q3: shoppers moved away from minimalism toward what Borenstein described as "novelty, texture and color." That read on taste matters for a brand built on rapid weekly apparel drops.

Reformation swung from net income in the same period last year to a net loss in the latest quarter. The driver was the tax impact of stock-based compensation tied to its initial public offering, not operations.

What are analysts saying about the results?

William Blair analysts said in a Thursday note that Reformation's recent quarterly results have exceeded expectations despite the company being new to public markets.

"The company continues to demonstrate an ability to read and react to demand faster than traditional apparel peers (weekly apparel drops), while strong brand resonance is driving outsized customer acquisition alongside healthy retention and cohort spending," the analysts wrote. "New stores are also tracking ahead of plan and driving broader DTC growth in their markets, while AI-enabled merchandising should further enhance the company's ability to localize assortments and chase demand as it scales."

The takeaway: analysts see the AI merchandising stack as a scaling tool, not a back-office experiment.

How big is the customer and store base?

The DTC-focused brand opened seven new stores in the quarter and ended the period with 77 locations. Active customers in Q3 jumped 23.4% year over year to 1.25 million — roughly 237,000 more active shoppers than a year earlier.

Reformation also raised its full-year guidance. The brand now expects net revenue of $610 million to $612 million for the year, up from its prior range of $602 million to $606 million. That is a $4 million lift at the low end and $6 million at the top.

The takeaway: growth is coming from both new customers and new doors, with the guidance raise signaling confidence in demand.

Is the brand ready for the holidays?

Borenstein told analysts the fourth quarter is off to a good start. She framed Reformation's merchandising speed as the decisive edge for the season.

"We are confident heading into Q4 based on all of the data we've seen so far and the response," Borenstein said. The chief executive added that the brand's agile, fast merchandising model is "a particular advantage in a dynamic environment right now, particularly in holiday because we are able to so quickly identify trends and respond in a period that is so important."

For marketers and merchandisers, the play is straightforward: pair weekly drops with AI-driven demand forecasting, and trend cycles become opportunities rather than inventory risks. Reformation's raised guidance and holiday confidence suggest the model is holding as the brand scales.