As it looks to hire employees in lower-cost states, Stitch Fix Inc. told its approximately 1,400 California-based stylists that they would be laid off. Many of the layoffs will occur in September. The impacted individuals will have the opportunity to move to remain with the personal shopping service and clothing merchant, The Wall Street Journal reported.
Of the retailer’s roughly 8,000 staffers, 5,100 are stylists who assist in choosing items to be mailed to shoppers monthly via the company’s subscription offering.
Katrina Lake, the founder and chief executive of the company, said, “Any decision that impacts our hardworking and talented people is incredibly tough, but we believe this is the right thing to do for our business.” The executive noted that the firm will offer bonuses and severance payments in addition to lengthened healthcare coverage.
The online retailer said it plans to bring approximately 2,000 stylists onboard in lower-cost areas such as Pittsburgh, Dallas, Minneapolis, Cleveland and Austin, starting in the summer and extending into 2021. In March, the retailer announced that two distribution centers had been temporarily shuttered due to COVID-19.
On March 10, Stitch Fix saw its shares drop over 30 percent after its Q2 sales for the fiscal year 2020 fell short of analysts’ estimates.
Some Stitch Fix investors were worried that the Silicon Valley firm had “grown large,” and that its recent rollout of a direct buy option “is a validation that ‘fixes’ are reaching a saturation point,” said BMO Retail Analyst Simeon Siegel, per a past report.
Stitch Fix, which was started by Lake in 2011, leverages data pulled from shopper questionnaires to send attire designed for consumers’ preferences and lifestyles. “Fixes” are the firm’s attire shipments to shoppers. StitchFix rolled out the direct buy option late last year, which lets users buy a single item in lieu of an entire box.