Stitch Fix to Cut 20% of Workforce as CEO Steps Down

In a letter to employees this week, Stitch Fix Founder Katrina Lake announced the layoffs and the departure of CEO Elizabeth Spaulding.
A Stitch Fix advertisment.
  • Stitch Fix will lay off 20% of its remaining salaried workforce.
  • The retailer laid off 15% of its salaried employees in June last year.
  • CEO Elizabeth Spaulding will step down immediately, and the retailer is closing its Salt Lake City distribution facility. 

Stitch Fix will eliminate 20% of its salaried employees, and its CEO Elizabeth Spaulding is stepping down from her role. 

The news was confirmed on Jan. 5 by Stitch Fix, which on Thursday shared an email to employees from founder Katrina Lake as a blog post on its website. In the post, Lake said Spaulding, who joined the company in 2020, would immediately step down. Spaulding previously worked at the consulting company Bain & Co., but was president of Stitch Fix from January 2020 until August 2021 when she assumed the CEO role from Lake. 

The retailer will also close its distribution facility in Salt Lake City, which opened about a year ago, Lake said, impacting all employees working at that location (about 150, according to a CNBCreport). Lake said that she would immediately step into the role of interim CEO, where she will lead the search to find a new leader of the digital personal styling company. 

“Despite the challenging moment we are in right now, the board and I still deeply believe in the Stitch Fix business, mission and vision,” Lake said in her email to employees. “We know because of the hard work and foundation laid by this team that there is a great future available for this company and we are committed to getting the company on a path to achieve it.” 

Salaried employees impacted by the cut will receive “at least” 12 weeks of pay — employees with longer tenure will receive greater severance. The impacted employees will receive health care coverage through April and mental health services that include self-help tools, legal and financial services, and work/life balance advice, the blog post said. 

The retailer said it planned to do “everything possible” to help impacted employees find new roles, including outplacement support and an alumni database that the impacted employees can join to have their information shared with potential employers. 

The January layoffs follow another round of cuts for the retailer, which laid off about 15% of its salaried workforce in June last year. The retailer, known for selling curated boxes of clothing to its subscribers, grew during the COVID-19 pandemic, but it stalled as more shoppers started returning to brick-and-mortar retail. As CNBC reported, Spaulding’s efforts to reinvigorate the brand, including a program called Freestyle that allowed shoppers to purchase items directly from Stitch Fix, largely failed.
It’s the latest company to announce large-scale layoffs. Amazon also this week said it would in total cut more than 18,000 jobs this year, including jobs cut last November. Like Stitch Fix, Amazon experienced growth during the pandemic but has failed to maintain that momentum.