Katrina Lake, CEO of Stitch Fix
Adam Jeffery | cnbc
stitch fix Founder Katrina Lake told employees on Thursday that the company would cut 20% of its salaried workforce and that she would retake her position as CEO. budding apparel company Continues to struggle with low sales, shrinking customer base and low market cap.
The brand’s current CEO, Elizabeth Spaulding, who joined the company in 2020 as president and Took over as CEO in August 2021Lake said, , will step down with immediate effect.
Related Investment News
“I will step in as interim CEO and lead the search process for our next CEO,” Lake said. said thursday, “Despite the challenging moment we are in right now, the board and I still believe deeply in the Stitch Fix business, mission and vision.”
Shares of the company were up nearly 4% in afternoon trading following the announcements.
Stitch Fix, which sells curated boxes of clothing on a subscription basis, just won big during covid pandemic With consumers stuck at home, the newly flush with cash availed the service to update their wardrobes. But as shoppers returned to the world, sales dropped and New strategies led by Spaulding failed,
Shortly after taking over as CEO, Spaulding led the rollout of a direct-buying option called Freestyle, which allowed customers to purchase items directly from the company, with the expectation that they would be won over as regular customers. . But the initiative stalled, and in June, the company announced it would lay off about 15% of its salaried workforce, or about 330 people.
The cuts left Stitch Fix with about 1,700 salaried employees as of June.
Neil Saunders, GlobalData’s managing director and a retail analyst, said in a statement Thursday that the company appears to have “lost its course” and that the issues it is facing are neither temporary nor immediate. are solvable.
“This is one reason the company has announced the elimination of approximately 20% of its salaried positions – an action that will help reduce losses and put the company in a better financial position,” Saunders said.
Stitch Fix employees learned about the job cuts Thursday morning and were told that the brand’s Salt Lake City distribution center would also be shuttering. In addition to the 20% cut, the staff at that center would also be laid off. Stitch Fix declined to comment on how many people worked at the distribution center.
Lake said affected employees would receive at least 12 weeks’ pay, which increases with tenure, and health care and mental wellness support would continue until April 2023.
Lake told the staff that she was “really sorry” for the cuts and thanked them for their “hard work” and “dedication”.
As founder, Lake has a unique perspective on the company and its potential, but he must contend with a consumer environment that has shifted significantly over the past year and a recession that is forcing shoppers to find new Like reducing your spending on discretionary items. Clothes.