Shares of Stitch Fix fell more than 5% on Tuesday afternoon after the company announced that founder Katrina Lake would resign as CEO.
The company’s president, Elizabeth Spaulding, will begin as executive director on August 1, according to a press release.
Lake founded the online styling service a decade ago when she was a student at Harvard Business School. The company adds a personal touch to e-commerce by hiring employees to choose clothing and accessories for customers who subscribe to the service or sign up for a “Remedy”. Items, tailored to each person’s style, are delivered by mail and include a prepaid return envelope. Customers only pay for what they keep, and the style charge applies to their purchases.
Since Lake started Stitch Fix, it has become a business with approximately 4 million customers in the US and the UK and approximately 8,000 employees. At the time Stitch Fix debuted on the market three years ago, she was the youngest woman to take on a public company. (This award now belongs to Bumble CEO Whitney Wolfe Herd.)
However, the company had an often tumultuous walk on Wall Street. Its earnings reports frequently drive sales, even though its share price has risen in recent years. Its shares debuted on the Nasdaq at $ 16.90 in 2017 and were $ 49.49 at the close of trading on Tuesday. Its market value is 5.26 billion dollars.
Stitch Fix has recently struggled with shipping delays and low customer costs. In March, it missed analysts’ earnings expectations for the first fiscal quarter. He said his active clients spent an average of $ 467, down 7% from the same time a year ago.
It also fired 1,400 stylists in California, or about 18 percent of the workforce, last year. At the time, the company said it intended to hire 2,000 stylists in other parts of the United States at a lower cost of living, such as Dallas or Minneapolis.
The company has expanded beyond its personal style and subscription-based model to increase sales. Customers can now purchase individual items, including some suggested based on previous purchases or recommended to complete an outfit.
The company’s shares have fallen by almost 16% this year.
Stitch Fix said in a press release that Lake will remain involved in the company as executive chairman of its board. She said she would also focus on the sustainability efforts of the personal style service and its marketing.
In a company-wide email, Lake said it was the right time for a transition, as more customers buy clothes and other goods online.
“Clothing retail is being reinvented, and Stitch Fix is extremely well positioned to lead through it,” she said. “This moment of transformation in our business and in our industry makes the right time to think about the next generation of management in our company.”
Prior to joining Stitch Fix, Spaulding was a partner at consulting firm Bain & Company.