Some of the biggest challenges came as a result of the company’s struggle to seamlessly onboard new customers, who utilize its service to have personalized clothing and accessory boxes delivered to their homes. Stitch Fix’s recently launched direct-buy offering called “Freestyle” has also failed to convert customers at the company’s anticipated rate.
“We’re still learning how best to onboard Freestyle first clients and recognize we have work to do on the Freestyle experience,” said Stitch Fix CEO Elizabeth Spaulding, who was appointed to the role in August last year.
While Stitch Fix is still figuring out how to best deliver an enhanced customer experience, analysts are increasingly wary of its growth prospects.
“At the end of the day, the push into Freestyle is an attempt to do everyday retail better,” said BMO Capital Markets analyst Simeon Siegel.
“Whether or not that succeeds will hinge on the company’s execution. … At the heart of it, Freestyle’s success will depend on it being a better version of how people already shop.”
Following Stitch Fix’s earnings call, Truist Securities downgraded the company’s stock from buy to hold, noting that the company’s management appears to be challenged. Telsey Advisory Group, meanwhile, cut its price target to $14 from $25 and downgraded the company’s rating from outperform to market perform, CNBC reported.
“While we expected [Freestyle] to expand the company’s addressable market and drive incremental revenue, it has proven difficult to roll out without adding friction to the onboarding of new Fix customers,” said Telsey Advisory Group’s CEO Dana Telsey.