Stitch Fix Looks to Exit UK and Cut Back US Distribution

Stitch Fix

Stitch Fix is considering withdrawing from the British market as it rethinks its business.

The online personal styling service said in an earnings announcement Tuesday (June 6) that it was exploring that option as part of a strategic review that will also see it scale back some of its distribution operations in the U.S.

Since entering the U.K. four years ago, “the macroeconomic environment and our business have changed,” Stitch Fix said in the announcement. “In addition to a strategic refocusing on our styling first business in the U.S., and despite ongoing efforts to control costs and increase efficiencies across the company, we have concluded the need to explore exiting the U.K. market in [fiscal year 20204].”

The company said in the announcement it will not renew the lease on its distribution center near Bethlehem, Pennsylvania, when it expires later this year, and will close its Dallas distribution center in 2024.

“By moving to a three distribution center network, from our current five distribution center network, we will have greater depth and breadth of inventory available for our stylists to serve clients,” Stitch Fix said in the announcement.

Stitch Fix earned revenue of just under $395 million in the third quarter, which was at the high end of the company’s guidance range and down 20% since the same quarter last year. Also down was Stitch Fix’s active client base, which fell 11% to 3.5 million.

In March, that active client number — defined as users who checked out or purchased clothes over the past 52 weeks — saw another 11% decrease.

Then-Chief Financial Officer Dan Jedda — now finance chief at Roku — attributed the sales results to “lower net active clients and higher promotional activity in the quarter” and pointed out that subscribers across the board were spending less than in previous years.

As PYMNTS noted at the time, consumers aren’t just shifting their spending habits because of inflation. PYMNTS’ Consumer Inflation Sentiment study, “The False Appeal of Deal-Chasing Consumers,” showed 69% of consumers have been switching their shopping habits in a trade-off that focuses on quantity over price and quality.

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