Stitch Fix Cuts Workforce as Customers Leave

Artificial intelligence (AI)-powered personal styling site Stitch Fix continues to struggle to retain existing customers and captivate new ones, leading the company to slash about 4% of its workforce during the third quarter of fiscal year 2022, the company said in a company press release.

“In light of Stitch Fix’s recent business momentum and an uncertain macroeconomic environment, the company undertook a detailed review of its business and what is required to build for the future,” the company said in the release, noting it eliminated about 15% of salaried positions in the move, with the bulk of the layoffs in non-technology corporate roles and styling leadership roles.

Stitch Fix’s stock has lost about 90% of its value in the past year and was down almost 20% to $6.30 in pre-market trading Friday (June 10), a far cry from its glory days of January 2021, when shares were peaking at more than $96. Clients were down 5% to 3.9 million in the third quarter, the release stated.

With the layoffs and other corporate restructuring, Stitch Fix said in the release it expects annual cost savings of $40 million to $60 million in fiscal year 2023. The company said it expects to incur restructuring and other one-time charges of about $15 million to $20 million, which is set to be recognized in the fourth quarter of fiscal 2022.

“Stitch Fix is confident in its long-term strategy and vision and that this is the right decision in order to position itself for profitable growth in the future,” the release stated.

Stitch Fix CEO Elizabeth Spaulding said in the release: “While third-quarter top-line results, as well as active client counts, were largely within our expectations, we know we still have work to do. This quarter we made progress on improving the overall client experience in order to position Stitch Fix for profitable growth and value creation over time.

Meanwhile, Amazon has it is using AI to drive eCommerce sales with the debut of Virtual Try-On for Shoes, an interactive mobile experience that allows customers to visualize how a pair of shoes will look on them.

Read more: Amazon Adds Virtual Try-on for Shoes