Stitch Fix reduces workforce by 15% as revenues drop in third quarter

US-based styling platform Stitch Fix has announced it plans to reduce its total workforce by 15%.

The decision, announced in its Q3 2022 financial results, has been made due to a loss in revenue and an "uncertain macroeconomic environment" at the online personal shopping and styling service.

The 15% cut affected salaried positions, mostly non-technology corporate and styling leadership roles.

For the third quarter, ending 30 April 2022, Stitch Fix reported the following results:

• Net revenue of £403 million, a decrease of 8% year over year
• Adjusted EBITDA Loss of £29.4 million
• Active clients of 3,907,000, a decrease of 200,000 or 5% year over year
• Net revenue per active client of £452, an increase of 15% year over year

Following the changes, Stitch Fix said that it expects annual cost savings of £32.7-£49 million in fiscal year 2023, balanced out by additional costs of around £12.3-£16.4 million.

For the fourth quarter of 2022 which ends on July 30, 2022, the company expects at 15%-14% year-on-year decline in revenue (between £397-£404.6 million). Its adjusted EBITDA is expected to be between 6% and 5%.

Stitch Fix CEO Elizabeth Spaulding, said: “While third quarter top-line results, as well as active client counts, were largely within our expectations, we know we still have work to do. This quarter we made progress on improving the overall client experience in order to position Stitch Fix for profitable growth and value creation over time. We are encouraged by the activity we are seeing inside the expanded Stitch Fix ecosystem, including our sixth consecutive quarter of revenue per active client growth.”

“We strongly believe in our strategy of expanding our established Fix model through the addition of on-demand styling and shopping via Freestyle. Together, this powerful combination addresses the full continuum of personalised shopping needs."