Online clothing retailer Stitch Fix will lay off around 1,400 stylists in California, or roughly 18% of its staff, and plans to hire outside of the state.
The San Francisco company employs 8,000 people, including 5,100 stylists who select clothing that is shipped to customers each month through subscriptions. Customers can wear and return items or pay to keep outfits they like.
The Wall Street Journal first reported the news. In an email to The Chronicle, Stitch Fix said it would provide a minimum two-week in severance pay for laid off employees, continue health care coverage and offer recruitment resources. It said all affected stylists are being offered the opportunity to relocate. The affected employees are all remote workers throughout California, according to a notice filed with the state that didn’t specify exact locations.
The layoffs will take place between June and September. The company said it was investing in lower cost hubs outside of California — in Austin, Dallas, Pittsburgh, Cleveland and Minneapolis — where it expects to hire around 2,000 stylists through 2021.
“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,” CEO Katrina Lake said in a statement. “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.”
The move is yet another example of companies moving operations outside of California and investing elsewhere, such as Charles Schwab, which is merging with TD Ameritrade, and moving to a headquarters in Texas. Bechtel and McKesson also moved headquarters out of San Francisco in recent years, while tech companies like Uber and Google have expanded in Texas and Chicago.
Stitch Fix said the layoffs were a strategic business decision and not related to the coronavirus pandemic. However, the pandemic has devastated retail spending with millions of people out of work. In March, Stitch Fix temporarily closed two of its distribution centers in South San Francisco, California and Bethlehem, Pennsylvania to comply with local public health orders.
Stitch Fix’s third quarter earnings call will be held on June 8.