Stitch Fix said it plans to lay off salaried employees by approximately 15 percent while reporting an 8 percent decline in its third-quarter ended April 30.
The apparel subscription service said the headcount reduction is in non-technology corporate positions and styling leadership roles.
As a result of the company’s decision and other changes, Stitch Fix expects an annual cost savings of $40 million to $60 million in the fiscal year 2023. The company expects restructuring and other one-time charges of approximately $15 million to $20 million to be recognized in the fourth quarter of fiscal 2022.
Third Quarter Key Metrics And Financial Highlights
- Net revenue of $492.9 million, a decrease of 8 percent year-over-year;
- Active clients of 3,907,000, a decrease of 200,000 or 5 percent year-over-year;
- Net revenue per active client (RPAC) of $553, an increase of 15 percent year-over-year;
- Net loss of $78.0 million and diluted loss per share of $0.72 against a year-ago loss of $18.8 million, or 18 cents, a year ago; and
- Adjusted EBITDA Loss of $36.0 million against positive adjusted EBITDA of $11.6 million
Stitch Fix CEO Elizabeth Spaulding said, “While third-quarter top-line results and active client counts were largely within our expectations, we know we still have work to do. 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.”
Spaulding added, “We strongly believe in our strategy of expanding our established Fix model through the addition of on-demand styling and shopping via Freestyle. Together, this powerful combination addresses the full continuum of personalized shopping needs. Our team is committed to executing our strategy with excellence while thoughtfully and deliberately making the necessary decisions and innovations to drive our business forward.”
For the fourth quarter, Stitch Fix expects revenue in the range of $485 million and $495 million, down in the range of 15 percent to 13 percent. Adjusted EBITDA is expected to show a loss between $30 million and $25 million, representing a negative 6 percent to 5 percent margin. Q422 Adjusted EBITDA excludes restructuring and other one-time charges totaling $15 million to $20 million.
Photo courtesy Stitch Fix