Dive Brief:
- More than 500 Stitch Fix employees will lose their jobs with the upcoming closure of a Dallas distribution center. Stitch Fix announced it would close the center, as well as another one in Bethlehem, Pennsylvania, in June.
- According to a notice filed with the Texas Workforce Commission, layoffs are scheduled to begin Dec. 1 and continue through April 5, 2024, the center’s final day of operation. In total, 558 people will be let go. Most of those facing layoffs – 484 according to the notice – are warehouse associates. Supervisors and managers at the Dallas location will also lose their jobs.
- Stitch Fix, which will also cut nearly 400 jobs at its Pennsylvania distribution center before its closure in February, said it plans to hire about 400 employees as the company ramps up capacity across its three other locations in Atlanta, Indianapolis and Phoenix. The company said it would hire employees from Dallas who move to one of those locations if they are in good standing and a role is available.
Dive Insight:
Closing the Texas and Pennsylvania facilities drops Stitch Fix’s distribution network from five to three facilities and will save about $10 million to $15 million annually. The personalized apparel e-retailer also is exiting the U.K. by the end of its upcoming first quarter after four years in that market.
Everyone subject to layoff at the Dallas distribution center was notified on June 6. Severance payments will be offered to people who remain employed until the warehouse closes. Those affected will also receive subsidized continued healthcare coverage and job search assistance in the months ahead, the company said.
Stitch Fix’s moves are part of a larger, long-term business strategy, and it appears to be moving the company’s financial performance in a positive direction. Stitch Fix reported in September that its Q4 net loss shrunk 70% to $28.7 million and its full-year loss fell 17% to $172 million.
Chief Financial Officer David Aufderhaar said during the company’s most recent earnings call that throughout the year, Stitch Fix improved its inventory position, realized over $150 million of annualized cost savings, and achieved its goal of returning to positive adjusted EBITDA and free cash flow. The company’s fiscal year 2023 net revenue fell 21% to $1.64 billion year over year. At that time, Aufderhaar said Stitch Fix had approximately 3.3 million active clients, a 13% year-over-year decrease.
Despite the macroeconomic pressures and shifting consumer sentiment, CEO Matt Baer, a former Macy’s executive who joined the company in June, told investors and analysts on the recent earnings call that he is optimistic about Stitch Fix’s future.
“Stitch Fix was founded on a belief that a technology meets humanity model could create an individually tailored shopping experience that would make it easy and enjoyable for people to find their style and buy clothing,” Baer said, according to a call transcript. “The company's commitment and investment in that belief has never wavered.”
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