Katrina Lake, CEO of Stitch Fix
Adam Jeffery | CNBC
On Monday, online retailer and cloakroom styling service Stitch Fix announced that it would fire 1,400 stylists in California by the end of September. The cuts affect around 18% of the workforce.
The Wall Street Journal previously reported on the company̵
At Stitch Fix, stylists choose clothing and accessories that the company sends to customers as part of a monthly subscription service. Customers can carry and return items or pay to keep the items they like best.
In March, Stitch Fix had to close two of its distribution centers, one in California and one in Pennsylvania, to temporarily meet Covid-19’s health mandates. In April, the company withdrew the third quarter and fiscal 2020 guidance due to the uncertainty surrounding the pandemic.
Stitch Fix announced on Monday that it plans to hire 2,000 stylists at locations in the United States that have lower cost of living than cities in California – locations like Austin, Texas, or Minneapolis. The company will hire stylists outside of California from 2021 this summer, a spokesman said, and laid-off stylists will have the opportunity to move and continue working.
Employees who don’t want to move will receive severance pay of at least two weeks, continued health care, help finding another job, and possible bonuses for staying until the layoffs are completed, a spokesman for Stitch Fix confirmed.
The company’s founder and CEO, Katrina Lake, said she made the following statement:
“We made the very difficult decision to reduce the number of stylists on our styling team in California as we invest in our other styling hubs in the United States and in the innovations that will help further develop our experience in the future All of our California stylists based in the United States are offered the opportunity to switch to new roles in other states.
Any decision that affects our hardworking and talented people is incredibly difficult, but we believe that this is the right one for our company. We are committed to helping our employees do this by providing as much financial stability as possible, including severance payments that increase with tenure, bonuses for stylists who stay with us during the transition period, enhanced health and recruitment resources.