Katrina Lake, CEO of Stitch Fix
Adam Jeffery | CNBC
Stitch Fix’s shares fell more than 3% Tuesday afternoon after the company announced that founder Katrina Lake would step down as CEO.
The company’s president, Elizabeth Spaulding, will start as managing director on August 1st, according to a press release.
Lake started the online styling service a decade ago when she was a student at Harvard Business School. The company personalizes e-commerce by having employees select clothing and accessories for customers who subscribe to the service or sign up for a “fix”. Items tailored to each person’s style are delivered by post and include a prepaid envelope for return. Customers only pay for what they keep and the styling fee is applied to their purchases.
Since Lake Stitch founded Fix, the company has grown into a company with around 4 million customers in the US and UK and around 8,000 employees. At the time Stitch Fix made its public debut three years ago, she was the youngest woman to take a company public. (That distinction now belongs to Whitney Wolfe Herd, CEO of Bumble.)
However, the company has had an often tumultuous ride on Wall Street. The earnings reports often lead to dramatic sell-offs, even if the stock price has ultimately risen over the years. Its shares debuted on the Nasdaq at $ 16.90 in 2017 and closed at $ 49.49 on Tuesday.
Stitch Fix has been struggling with shipping delays and lower customer spending lately. In March, the analysts’ sales expectations for the first fiscal quarter were missed. Active customers spent an average of $ 467, down 7% from the same period last year.
The company also laid off 1,400 stylists in California, or roughly 18% of its workforce, last year. At the time, there were plans to hire 2,000 stylists in other parts of the US with a lower cost of living such as Dallas or Minneapolis.
The company’s shares are down nearly 16% so far this year.
The company has expanded its subscription model to increase sales, e.g. B. to suggest individual items that customers can buy, or to recommend accessories, tops or bottoms that complete an outfit.
Stitch Fix said in a press release that Lake will continue to serve as Executive Chairman of the Stitch Fix board of directors. She will also focus on the sustainability efforts and marketing of the personal styling service.
In a company-wide email, Lake said the time is right for a transition as more customers look for clothing and other merchandise online.
“The clothing retail industry is being reinvented and Stitch Fix is extremely well positioned to catch on,” she said. “This moment of change in our business and in our industry makes it the right time to start thinking about the next generation of leaders in our company.”
Before joining Stitch Fix, Spaulding was a partner in the consulting firm Bain & Company.