Stitch Fix to cut workforce by 20%, CEO steps down

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By Sam Boughedda

Stitch Fix (NASDAQ:SFIX) said on Thursday that its Chief Executive Elizabeth Spaulding will step down from her role effective January 5, 2023, while it also announced a cut of around 20% of its workforce.

The company's founder and former Chief Executive Officer, Katrina Lake, has been named CEO on an interim basis.

"It is now time for a new leader to help support the next phase. With that context, the Board and I have made the difficult decision that I will step down as CEO." Ms. Spaulding said

Following the news, Stifel analyst Lamont Williams told investors in a note that Spaulding "led Stitch Fix as the company worked through the difficult transition to evolve the platform from a Fix-only model to a Fix/Freestyle platform."

"This transition has been complicated by a number of impact," wrote Williams, who added that the firm believes Ms. Lake is the right person to assume the CEO role for the immediate future.

In a separate announcement Thursday, Lake revealed the company will be reducing the size of its workforce, while it will also be closing its Salt Lake City distribution center, with its team there also impacted.

Soaring inflation and other macroeconomic pressures have provided significant headwinds for Stitch Fix, resulting in a demand slowdown. Last month the company announced it would reduce marketing in the back half of the year.

"We will be losing many talented team members from across the company and I am truly sorry," Lake said in a statement.

Stitch Fix shares are up around 4% at the time of writing.