Stitch Fix shares fell more than 5% on Tuesday afternoon after the company announced that founder Katrina Lake would retire as CEO.
Spanish President Elizabeth Spaulding will take over as chief executive on August 1, according to a news release.
Lake started the online styling service a decade ago when she was a student at Harvard Business School. The company adds a personal touch to e-commerce by selecting employees’ clothing and accessories for customers who sign up for the service or register for a ‘Fix’. The items, customized according to the style of each person, are delivered by mail and contain a prepaid envelope for returns. Customers only pay for what they like and the style fee is applied to their purchases.
Since Lake Stitch Fix started, it has grown into a business with about 4 million customers in the US and UK and about 8,000 employees. At the time when Stitch Fix debuted in the stock market three years ago, she was the youngest woman to make a venture in public. (The distinction now belongs to Bumble CEO Whitney Wolfe Herd.)
However, the company regularly undertook a tumultuous ride on Wall Street. Its earnings reports lead to quick sales, even though the share price has finally risen over the years. Its shares debuted at $ 16.90 on the Nasdaq in 2017 and were $ 49.49 at the close of trading on Tuesday. Its market value is $ 5.26 billion.
Stitch Fix has recently struggled with shipping delays and reduced customer spending. In March, analysts’ revenue expectations for the fiscal first quarter were missed. According to him, his active clients spent an average of $ 467, a decrease of 7% compared to the same time a year ago.
It also fired 1,400 stylists in California last year, or about 18% of its workers. At the time, the company said it planned to hire 2,000 stylists in other parts of the U.S. with a lower cost of living, such as Dallas or Minneapolis.
The company has further expanded its personal style and subscriber-based model to also increase sales. Customers can now purchase individual items, including suggestions based on previous purchases or recommended to complete an outfit.
The company’s shares have fallen by almost 16% so far this year.
Stitch Fix said in a news release that Lake will remain involved with the company as executive chairman of the board. It is said that she will also focus on the sustainability efforts of the personal styling and its marketing.
In an email for the entire company, Lake said it was an appropriate time for a transition because more customers are buying clothes and other goods online.
“Clothing stores are undergoing a reinvention, and Stitch Fix is exceptionally well positioned to lead through it,” she said. “This moment of transformation in our business and our industry makes it the right time to reflect on the next generation of leadership at our company.”
Prior to joining Stitch Fix, Spaulding was a partner at consulting firm Bain & Company.