Stitch Fix to fire 20% of its employees as CEO steps down
Tech layoffs continue unabated as a slew of big tech companies — ranging from Facebook’s Meta to Twitter— are letting employees go due to the ongoing recession and global economic slowdown. Stitch Fix is the latest to join the layoff phenomenon after the founder Katrina Lake announced the fledgling apparel company will be cutting 20% of its staff.
In a message to the company’s employees on Thursday, Lake said the company will be cutting 20% of its salaried workforce and she will reassume her post as CEO as the fledgling apparel company continues to grapple with the sluggish economy. The layoff left Stitch Fix with about 1,700 salaried employees, as of June.
In conjunction with the layoff announcement, Lake also said that the current company’s CEO, Elizabeth Spaulding, will be stepping down effective immediately. Spaulding joined the company as president in 2020 and took over as CEO in August 2021.
“I will be stepping in as interim CEO and leading the search process for our next CEO,” Lake said Thursday. “Despite the challenging moment we are in right now, the board and I still deeply believe in the Stitch Fix business, mission and vision.”
Founded in 2011 by Katrina Lake and former J.Crew buyer Erin Morrison Flynn, Stitch Fix is a personal styling platform that delivers curated and personalized apparel and accessory items for women. The company uses proprietary recommendation algorithms and data science to personalize clothing items based on size, budget, and style.
Since its inception over a decade ago, Stitch Fix generated over $1 billion in sales during 2018 and reported 3.4 million customers in June 2020. However, the company continues to face headwinds as grapples with low sales, a dwindling customer base, and a reduced market cap.
You can read the complete message below.
A message from our Founder
The message below was shared with Stitch Fix employees today.
Today, I’m writing to share two significant changes. Firstly, I’m sharing the difficult news that we will be reducing the size of the Stitch Fix team by about 20% of salaried positions. In addition, we are closing our Salt Lake City distribution center, where our team is also impacted. We will be losing many talented team members from across the company and I am truly sorry. Everyone will get an email soon letting you know what this means for you.
Our priority today is to ensure that those leaving Stitch Fix are supported in their transition, and we are offering the following support to them:
- Pay: Departing employees will receive at least 12 weeks of pay, which increases with tenure.
- Healthcare: Healthcare support through April 2023 and mental wellness support up to the end of April 2023, which also includes counseling, self help tools, legal and financial services as well as online work/life balance advice.
- Career support: We will do everything possible to support those impacted to find new roles, including outplacement support and an opt-in alumni database where their profiles are accessible to potential employers. Our departing teammates have made valued contributions to Stitch Fix and any company will be lucky to have them on their teams.
Some of these details will differ for the proposed changes to our team in the UK, and email notifications will contain information specific to each impacted employee’s location.
To those impacted: You took a chance on Stitch Fix, trusted us with your time and investment of yourself, and I am sincerely sorry that we are parting ways with you in this way today. Thank you for your hard work, dedication, and the many moments of joy and meaning that brought to your teams, our community, and our clients. Your contributions will have a lasting impact on our business and our culture, and for that we are all grateful. I know many of you will want to reach out to others within the Stitch Fix community, so your access to email and Slack will be open until later this afternoon.
Second, I also wanted to share that Elizabeth and the Board of Directors have made the difficult decision that Elizabeth will be stepping down as CEO to make room for a new leader. 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. Effective today, I will be stepping in as interim CEO and leading the search process for our next CEO. Despite the challenging moment we are in right now, the board and I still deeply believe in the Stitch Fix business, mission and vision. We know because of the hard work and foundation laid by this team that there is a great future available for this company and we are committed to getting the company on a path to achieve it.
All the best,