CEO of Stitch Fix to Resign as Company Announces 20% Reduction in Salaried Positions

Stitch Fix Inc. (SFIX) is a leading online personal styling service. The company offers a convenient and personalized shopping experience to its clients, who can choose from a wide range of clothing and accessories.

The company said it is cutting 20% of its salaried jobs, its second major downsizing in the past year. Its founder will return to lead the personal shopping and styling service.

The San Francisco-based company said Elizabeth Spaulding would resign as chief executive after spending less than 18 months in the role. Katrina Lake, who was CEO from the company’s inception in 2011 until July 2021, will run the company on an interim basis, Stitch Fix said Thursday.

Stitch Fix laid off about 330 employees last year, representing about 4% of its total workforce. The company is now restructuring and will be closing a warehouse that opened in Salt Lake City in 2021. When the warehouse opened, Stitch Fix said it would create 400 jobs.

As of July 30, the company had approximately 7,920 full- and part-time employees, including around 3,400 stylists and 3,100 fulfillment-center workers.

Stitch Fix is offering departing employees at least 12 weeks of severance pay, which increases with tenure, according to a company blog post. This is a great way for the company to show its appreciation for its employees' hard work.

Ms. Lake is set to serve as interim chief for six months or until a successor is appointed, the company said. Ms. Spaulding, who previously worked as a partner at consulting firm Bain & Co., joined StitchFix as president in early 2020 and took over as CEO in August 2021.

Stitch Fix is a personalized styling service that sends you hand-picked clothes, shoes and accessories based on your style preferences. Originally focused on women's apparel, the company has since expanded its offerings to include men's and children's clothing, as well as a traditional e-commerce site.

The company's sales forecast for the full year was cut in December, and it was reported that the number of active clients had declined by 11% year-on-year in the first quarter of the company's fiscal year. Executives said at the time that they would take measures to reduce costs and focus on improving the company's profits. Stitch Fix has been unprofitable in each of its last three fiscal years.

"We still believe strongly in the Stitch Fix business, mission and vision, despite the challenges we are currently facing," Ms. Lake wrote in a company blog post.

Stitch Fix went public in 2017 at a valuation of about $1.4 billion. Its stock surged during the pandemic, pushing its value above $11 billion in early 2021. The company now has a market capitalization of roughly $360 million.