The Stitch Fix logo on a smartphone arranged in Hastings-on-Hudson, New York, U.S., on Saturday, June 5, 2021. Stitch Fix Inc. is scheduled to release earning on June 7.
Tiffany Hagler-Geard | Bloomberg | Getty Images
Stitch Fix is laying off 15% of salaried positions within its workforce, mostly in corporate roles and styling leadership positions, according to an internal memo that was seen by CNBC.
Shares of the company fell about 9% Thursday, to trade around $7.87. Shares traded as high as $68.15 a year ago.
The job cuts come as the online styling service has been grappling with higher expenses on everything from its supply chain to marketing to labor, and it has also been struggling to onboard new users.
“We’ve taken a renewed look at our business and what is required to build our future,” Stitch Fix CEO Elizabeth Spaulding said in the memo. “While this was an incredibly difficult decision, it was one needed to make to position ourselves for profitable growth.”
The roughly 330 people were notified of the cuts on Thursday morning, the memo said. That number represents about 4% of the company’s overall workforce.
The cutbacks at Stitch Fix fit into a broader trend shaping up within the U.S. labor market, as pandemic darlings such as Peloton, Netflix and Wayfair become more conservative with their hiring, but airlines, restaurants and hospitality chains still struggle to fill roles.
The layoffs come three months after Stitch Fix cut its revenue guidance for the year and withdrew its earnings forecast. Spaulding said the company’s active client count was not where she wanted it to be.
Stitch Fix’s business is entirely online and that was seen as a bright spot during earlier stages of the Covid pandemic, as spending shifted online. More recently, its rollout of a direct-buy option known as Freestyle didn’t go as well as the company had hoped for. And more and more shoppers are shifting back to spending their money in stores as pandemic restrictions lift.
Stitch Fix is set to report fiscal second-quarter results after the market close.
It’s market cap has fallen below $1 billion, as the stock has declined about 55% this year.
This story is developing. Please check back for updates.