Stitch Fix To Cut 15% Of Workforce In Another Blow To Pandemic-Boosted Companies

Online personal styling service Stitch Fix will lay off 15% or about 330 workers of its salaried staff, marking another downturn for companies that saw a significant boost during the pandemic. The company has been experiencing troubles with higher costs and a decline in customers.

In a memo to employees Thursday, Stitch Fix CEO Elizabeth Spaulding said the layoffs represented “approximately 4%” of total company roles. Spaulding noted that most of the layoffs will be made in “non-technology corporate roles and styling leadership roles.”

Spaulding revealed that the people losing their positions were notified Thursday morning, adding that the team is prioritizing support for affected employees although she did not specify how the laid off workers will be assisted.

CNBC first reported on the layoffs after the online styling company provided a fiscal fourth-quarter forecast that disappointed market analysts. The company said it is expecting revenue to be between $485 million and $495 million. The said figures account for about a 15% slump from revenue numbers in previous years, CNBC reported.

In its fiscal third-quarter report, Stitch Fix posted a loss of $78 million, Associated Press reported. The company posted revenue of $492.9 million, beating Wall Street expectations by a slim margin.

Stitch Fix has said job cuts will likely result in up to $60 million in salary savings during the fiscal year 2023. By Thursday, Stitch Fix shares were about 15% down in after-hours trading after closing at $7.78. About a year ago, the stock traded as high as $68.15 – a stark contrast to the recent figures.

Late last year, Fortune reported that Wall Street already had doubts about how Stitch Fix will pull off a planned makeover triggered by slowing demand for the styling service. Furthermore, analysts raised questions about whether the freestyle option that allows customers to buy products they choose themselves would actually result in growth.

Stitch Fix is just one of the companies that saw a massive boost during the pandemic to resort to employee layoffs due to the recent demand decline. Last month, streaming giant Netflix confirmed it is once again laying off employees after it experienced a decline in subscribers for the first time in 10 years. Zoom and Peloton are also among the companies that saw significant slower demand in recent months after receiving a boost during the peak of pandemic lockdowns.