Stitch Fix announces job cuts amid widening Q3 losses

Online styling platform Stitch Fix announced Thursday plans to cut 15 percent of its salaried workforce as its losses widened and revenues fell in the third quarter.

In the three months ended April 30, the US company made a net loss of 78 million dollars compared to a loss of 18.8 million dollars a year earlier, while it made an EBITDA loss of 36 million dollars from an EBITDA profit of 11.6 million dollars.

It came as its net revenue fell 8 percent year-over-year to 492.9 million dollars as its active client count fell 5 percent.

On a brighter note, revenue per active client increased 15 percent to 553 dollars.

Stitch Fix CEO Elizabeth Spaulding said the third-quarter results were “largely within expectations”, but added “we still have work to do”.

She said: “This quarter we made progress on improving the overall client experience in order to position Stitch Fix for profitable growth and value creation over time.

“We are encouraged by the activity we are seeing inside the expanded Stitch Fix ecosystem, including our sixth consecutive quarter of revenue per active client growth.”

Job losses

In light of its Q3 results, Stitch Fix said it made the “difficult decision” to slash its workforce. It will impact around 15 percent of its salaried employees - or around 330 people - and around 4 percent of its overall workforce.

The company said most of the reductions are in non-technology corporate roles and styling leadership roles.

Stitch Fix said it expects annual cost savings of between 40 million dollars and 60 million dollars in FY23 as a result of the redundancies.

Looking ahead, the company expects fourth-quarter net revenue of between 485 million dollars and 495 million dollars, representing a year-on-year decline of between 13 percent and 15 percent.