Stitch Fix is laying off 20% of its staff as it struggles to sustain demand for its online personal styling service.
The news comes along with CEO Elizabeth Spaulding’s decision to step down from her role. In Spaulding’s absence, founder Katrina Lake will take over the reins while the company looks for a permanent chief executive.
“We will be losing many talented team members from across the company, and I am truly sorry,” Lake said. “Despite the challenging moment we are in right now, the board and I still deeply believe in the Stitch Fix business, mission and vision.”
Lake founded Stitch Fix 12 years ago while attending Harvard Business School. In 2017, the company received an investment of $120 million. It later became one of the only profitable players in the space, driven by the shift in consumers’ habits during the pandemic. Bloomberg reported.
Unfortunately, the company’s good fortunes have since reversed as consumers have returned back to shopping in physical stores, and many are cutting back on discretionary spending.
In June last year, the company announced plans to cut 15% of its salaried workforce. Fast forward to October 2022, the company reported a 22% decline in quarterly net revenue compared to the year before, while the share of active clients declined by 11%.
These challenges are leading market analysts to question the company’s ability to turn around its business and find its footing again.
“A turnaround will not be easy as the consumer economy is in a very different place to a few years ago and Stitch Fix still needs to think about its place in this new era,” said Neil Saunders, an analyst at consulting company GlobalData Plc. “The sales and profit lines have weakened significantly and there are few signs that pressures will ease soon.”