California may be getting too costly for Stitch Fix. The San Francisco-based online personal styling service told 1,400 of its stylists Monday—or 18 percent of its staff—that they’ll be losing their jobs.
Stitch Fix, which uses a combination of data science and algorithms, plus input from its roughly 5,100 stylists to deliver personalized apparel selections to its clients, said it’s looking instead to hire as many as 2,000 stylists in lower-cost locations, like Dallas, Minneapolis, Pittsburgh, Cleveland and Austin, Texas starting this summer, The Wall Street Journal reported.
The company claims the move had nothing to do with COVID-19, but CEO Katrina Lake told the Journal, “we believe this is the right thing to do for our business.”
The California layoffs are expected to happen in September, but Stitch Fix said it will offer new roles in other locations to those affected, or they’ll be given severance payments, bonuses, and extended health-care coverage.
In March, the company closed two of its distribution centers—one in San Francisco, one in Bethlehem, Pennsylvania—as a result of the pandemic, managing its inventory and serving clients from its four other U.S. distribution centers.
Stitch Fix is expected to release its third quarter earnings results Monday, but for its second quarter ended Feb. 1—and before pandemic-related ramifications would have set in—the company saw its number of active clients increase 17 percent to 3.5 million and its revenue jump 22 percent year over year to $451.8 million.
Lake said at the time, likely queuing up the company’s latest move, “This quarter, we are excited to expand our new direct buy offerings to even more clients. As we continue to evolve our personalization capabilities we’re confident in our ability to capture additional market share, and deliver on our mission to transform the way people find what they love.”