Stitch Fix Inc. will conduct additional layoffs and shake up its leadership as the personal-styling company comes off a dismal year for its stock.
Founder Katrina Lake said in a Thursday letter to employees that the company plans to reduce salaried headcount by 20% and close its Salt Lake City distribution center.
“We will be losing many talented team members from across the company and I am truly sorry,” she said in the letter, which was also posted to Stitch Fix’s
SFIX,
corporate blog.
Additionally, Lake plans to step back into the role of chief executive on an interim basis, taking over from Elizabeth Spaulding, who is leaving the post, it was also announced Thursday.
“I also wanted to share that Elizabeth and the Board of Directors have made the difficult decision that Elizabeth will be stepping down as CEO to make room for a new leader,” Lake, who is also board chair, said in her letter.
Shares of Stitch Fix were up 5% in morning trading. The stock is down about 81% over the past 12 months.
Stitch Fix disclosed in a Thursday press release that Lake will hold the interim CEO position for six months or until a permanent successor is appointed, unless she and the board of directors come to another agreement.
See more: Stitch Fix CEO to exit after less than a year and half in role
MKM Partners analyst David Bellinger wrote in a note to clients that he had spoken with Stitch Fix shortly after the announcement and left with the impression that Lake “does not have ambitions to become the company’s permanent CEO given the business has changed meaningfully” since she become board chair in August 2021.
“From our standpoint, [Stitch Fix] is likely to continue its current focus on liquidity and profitability before any significant changes are announced,” he wrote.
Barclays analyst Trevor Young noted that the news did not come as a shock. “With [Stick Fix] shares down ~94% during Ms. Spaulding’s tenure and the path back to positive customer growth once again pushed back, we’re not entirely surprised the company opted to make a change,” he wrote in a note to clients.
Spaulding became CEO in August 2021. She announced in her own letter in June 2022 that Stitch Fix would be cutting 15% of salaried positions at the time, which amounted to about 330 jobs.
As of July 30, the company had about 7,920 full- and part-time employees, most of them stylists or fulfillment-center workers.