The company’s experience holds key lessons for other tech companies looking to recapture the growth rates they enjoyed in their earlier years, rather than continuing to focus on their initial customers, according to the report.
In the case of Stitch Fix, the firm started out selling packages of clothing that were curated for each customer and sold primarily to women, the report said.
Then, seeking to grow its client base, it added men’s apparel in late 2016, children’s clothing in 2018 and its first international market, the United Kingdom, in 2019. The firm also added a la carte shopping in 2021 for all customers, not just those who had already purchased curated packages, per the report.
At the same time, Stitch Fix’s growth rate slowed from twofold in 2016 to 34% annually in mid-2017 and slower by 2019. The share of its customers who were new has fallen from 50% in 2018 to 20% in 2022, according to the report.
As of October, women’s apparel still accounted for two-thirds of its sales, the report said.
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Over the years, the firm’s primary source of market cap growth was the closure of physical stores during the pandemic, which drove its market cap above $11 billion. It has since dropped 95%, per the report.
Stitch Fix did not immediately reply to PYMNTS’ request for comment.
The firm announced Jan. 5 that after months of declining sales, it would replace its CEO, cut 20% of its salaried staff and close a distribution center. The move followed a 4% workforce reduction in June.
During Stitch Fix’s most recent earnings call (Dec. 6), the company reported that its revenues had fallen 22% year over year during the quarter.
“Clients are spending less across a broad set of cohorts, and we expect this to continue given the economic backdrop and the deep discounting we’re seeing in the retail industry,” Chief Financial Officer Dan Jedda said during the call.
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