Months of declining sales have led Stitch Fix to impose layoffs and replace its CEO.
Katrina Lake, founder of the artificial intelligence (AI)-powered personal styling site, told employees in a message Thursday (Jan. 5) that the company would cut 20% of its salaried staff. In addition, Lake said she would become interim CEO, replacing Elizabeth Spaulding, who has held that job since August 2021.
“I am grateful for Elizabeth’s many contributions as president and then as CEO and am thankful for her leadership during what has been an unprecedented time for our business and the world,” Lake wrote.
In addition to the staffing cuts, Stitch Fix also plans to close its distribution center in Salt Lake City, Lake wrote.
Stitch Fix had laid off 4% of its workforce in June as the company struggled to retain existing customers and attract newer ones.
The company continued to struggle as the year progressed. September found Stitch Fix focused on what Spaulding called the “strength of listening and responding to client requests and meeting the moment” amid a drop in revenue.
Its earnings results at the time showed net revenue of $481.9 million, down 16% year over year, and 3.7 million active clients, down 9% from the prior year.
Last month’s quarterly earnings showed Stitch Fix revenues fall by 22% year over year. And while active customer numbers went up, Chief Financial Officer Dan Jedda said the company was also seeing more customers hold off spending, “partially due to the macro environment.”
Jedda added that the company’s analysis indicated “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.”
As PYMNTS reported earlier this week, layoffs in the tech sector last year were nearly double those seen in the industry during the pandemic.
According to Layoffs.fyi — a website that tracks layoffs in the industry — tech companies cut more than 153,000 jobs in 2022, versus 80,000 between March and December 2020 and 15,000 in 2021.
The website’s findings showed that retail and consumer firms were the two components of the tech sector hit the hardest last year, with around 40,000 total jobs lost.