AI startup Stitch Fix, a company that uses algorithms and computer vision to help consumers find clothes they like, is apparently taking a bold approach to company expansion: it’s “significantly reducing” the number of employees it has so that it can hire people in other states.
TNW obtained a copy of a memorandum sent to “Stylists” at the company and confirmed its veracity with independent sources familiar with the situation:
According to the memo, the company is laying off stylists in two waves beginning on 5 June and ending on 18 September:
As we grow and want to invest in our other styling hubs around the country, it does not make financial sense to maintain a large styling team in California.
Stitch Fix employs 1,424 people as Stylists in California. It’s unclear how many will remain after the culling phases but the company says it will create a “small, full-time staff” to support its “HQ initiatives.” Furthermore, the company says it will offer assitance to employees planning to relocate but it appears as though those employees will have to apply for these new positions.
This comes as a shock to those of us who’ve watched Stitch Fix from the outside, especially considering it had a $1.6 billion evaluation just a couple of years ago. And the timing couldn’t possibly be crueler: In the middle of a pandemic and nation-wide protests, these people will join the 40 million other US citizens who are currently unemployed, many with less than a week’s notice they’re being laid off.
We contacted Stitch Fix and were given the following statement from CEO and founder Katrina Lake:
We have taken the very difficult decision to reduce the number of Stylists in our styling team in California, as we invest in our other styling hubs across the US, and the innovations that will help evolve our experience in the future. All of our California-based stylists will be offered the opportunity to relocate to the new roles in other states. Any decision that impacts our hardworking and talented people is incredibly tough, but we believe this is the right thing to do for our business. We are committed to supporting our people through this by providing as much financial stability as possible, including severance payments that increase with tenure, bonuses for Stylists staying with us during the transition period, extended healthcare and recruitment resources.
Stitch Fix was built one relationship at a time, and our Stylist community is an increasingly vital part of the Stitch Fix experience – one we believe gives us the ability to engage with our clients in a deeply personal way, especially now when empathy and human connection are more important that ever.
In related news, this preview of the company’s upcoming earnings reports indicates trouble on the horizon for Stitch Fix.
Published June 1, 2020 — 21:56 UTC