time now for our stock of the day,
we're taking a look at shares of stitch fix as the online personal styling service
did announce a big round of job cuts along with the C suite shakeup.
So the company saying earlier today that it's gonna
lay off about 20% of its salaried workers.
That accounts for more than
1000 jobs
as the company had nearly 8000 total employees as of last year.
Well,
the ceo Elizabeth spaulding was also announcing that she'll be stepping down as
the chief executive with the founder who you see on your screen there,
Katrina Lake reentering the role at least temporarily.
The company is also gonna close a distribution center in Salt Lake City
and shares a stitch fix up close to 10%
today as investors seem to like the cost cutting measure
whether it will be enough to help turn the company around still up in the air though.
I mean the stock is just $3.51.
So stitch fix was growing rapidly before the pandemic. A super hot I. P. O.
But once the global health crisis hit, the stock did start to tumble
until people got sick of wearing sweatpants and wanted to
dress up again in late 2020 and early 2021.
Well,
the company began to actually turn a quarterly profit causing the stock
disorder record highs of around $97 a share in January of 2021
in anticipation of a full economic reopening,
but we know how that went. I mean a lot of people still not in the office.
So the good times didn't last stitch fix.
Overestimated the market for its services botched the
rollout of its direct to consumer platform freestyle.
And by the time executives could catch their breath,
they found themselves in an economic downturn,
causing challenges like supply chain issues,
inflation and changing consumer sentiment,
which in turn brought lower sales and caused the company to burn through cash,
turning back into unprofitable. Itty. So in the past two years has stopped down 95%.
That's rough.
Well,
all of this causing some major conflict between the company and its investors.
No surprise stitch fix,
acknowledging that it downplayed the significance of its shift from
a subscription based model to a retail model which allows
customers to buy directly from the site instead of choosing
from a curated monthly selection of clothes picked by a stylist
stitch fix.
Initially said that the retail model and
the subscription model could work in tandem with
each other and denied claims that the new model would cannibalize the existing one,
but turns out that's exactly what happened
when customers visited the site looking for the subscription service.
The primary landing page feature the direct to buy model
which ate into the part of the business that so many people invested in
making shareholders pretty upset and leading to a class action lawsuit.
So not just a down share price. So we'll see whether or not
stitch fix can pull itself out of this rut
Or whether or not the business is broken. I don't know, $3.50 apiece.
We'll see what Katrina light can do.