Katrina Lake, CEO of Stitch Fix
Adam Jeffery | CNBC
On Monday, online retailer and wardrobe styling service Stitch Fix said it would lay off 1,400 stylists in California between now and the end of September. The cuts affect about 18% of its workforce.
The Wall Street Journal previously reported on the company’s plans.
At Stitch Fix, stylists pick out clothing and accessories that the company ships to customers as part of a monthly subscription service. Customers can wear and return items, or pay to keep the ones they like the most.
In March, Stitch Fix had to close two of its distribution centers, one in California and another in Pennsylvania, temporarily to comply with Covid-19 health orders. In April, the company withdrew guidance for the third quarter and fiscal year 2020 because of uncertainty amid the pandemic.
Stitch Fix said Monday that it plans to eventually hire 2,000 stylists in U.S. locations which have a lower cost of living than cities in California – places like Austin, Texas, or Minneapolis. The company will be hiring stylists outside of California starting this summer and continuing into 2021, a spokesperson said, and laid off stylists will have the chance to relocate and continue working.
Employees who do not want to relocate will receive a minimum two-week severance payment, continued healthcare, help getting another job and possible bonuses for staying on until the layoffs are complete, a Stitch Fix spokesperson confirmed.
The company’s founder and CEO Katrina Lake said offered the following statement:
“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.