Stitch Fix is hoping that a new transformation team will help reinvigorate the styling service, as its new CEO Matt Baer looks to shake up the business.
In an email sent internally last week, after announcing that Stitch Fix was eliminating full-time positions for stylists, Baer also made a few C-Suite announcements. Specifically, Baer announced that Stitch Fix was in the process of building out a transformation office, whose mandate is “to identify and drive a clear set of key initiatives focused on both foundational and long-term growth opportunities.”
Overseeing this office is Cherizza Lundy, formerly the vice president of strategy at Stitch Fix who was promoted to vice president of business transformation in November. Before joining Stitch Fix, Lundy worked at Google, including as a strategic response lead. “With Cherizza taking on this responsibility, we will hire a new Vice President of Strategy who will join the Executive Leadership Team and report to me,” Baer’s email wrote.
Stitch Fix is currently hiring for a transformation director and transformation lead to also join the newly-formed team. In addition, Baer announced that the company’s chief people and culture officer, Dana Rasmussen, will be leaving on March 15 and Stitch Fix will be looking to fill her role.
All of these new hires are formalizing what Baer has already said he plans to do at Stitch Fix: transform the business. He hasn’t, however, shared many specifics about how he intends to do so.
Baer was announced as Stitch Fix’s new CEO in June, after previously serving as the chief digital officer at Macy’s. In its fiscal 2023 year, Stitch Fix reported that its revenue declined 21% year-over-year, while active clients dropped 13% in that same period. Against that earnings backdrop, it’s clear that Baer intends to shake things up at Stitch Fix, and is hiring for roles designed to help the company rethink the way it does things.
“To ensure that we continue to fully realize our vision into the future, we must think differently, work differently, and approach our business differently, Baer said during his first earnings call as CEO in September.
In an email to Modern Retail, a Stitch Fix spokesperson said, “We continue to evolve our business to ensure we are delivering the most innovative, personalized and convenient online styling experience. As part of this, we’ve set up a Transformation Office focused on identifying foundational and long-term growth opportunities. Fundamental to this is ensuring we have the right team in place to take our business forward.”
According to a job posting, the transformation director will “lead the company through our critical transformation capabilities, set processes and initiatives tied to business transformation to position us for sustainable profitable growth.” This person is expected to “implement transformation office or program management best practices,” and “leverage financial, market and client data to identify the biggest areas of opportunity for execution on short and long term solutions to improve company outcomes immediately,” among other responsibilities.
Some of the other new executives Baer has hired so far during his six-month tenure are Danit Marquadt, the company’s chief communications officer, who was previously chief communications officer at Serta Simmons, and Tony Bacos, Stitch Fix’s new chief product and technology officer who spent over seven years at Amazon Fashion. In its press release announcing Bacos’s hire, Stitch Fix said that he “led a successful turnaround of [Amazon Fashion] and the team responsible for all aspects of the shopping experience.
Stitch Fix’s recent string of revenue declines and losses has been worrisome to some Wall Street analysts who wonder how much value the company’s styling model still holds in today’s retail environment.
There have also been some changes to the economic and consumer landscape that make the Stitch Fix model more challenging today, compared to when it launched. Founded in 2007, Stitch Fix was designed “for the consumer who had difficulty getting out to the store and discovering new brands,” said Jessica Ramirez, senior research analyst at Jane Hali & Associates.
The way it’s styling concept works is that customers pay $20 for each ‘box’ and in exchange receive five items of clothing curated by a stylist; that $20 styling fee works as a credit toward whatever item they want to keep. People can choose how often they receive a box. Stitch Fix also experimented with an à la carte shopping service called Freestyle in 2021, though the company ran into challenges growing both that as well as its recurring styling service.
The company’s styling service is designed for people who want to outsource the work of discovering new brands and clothes to someone else. But, according to Ramirez, it’s gotten easier than ever to discover new brands, particularly with the rise of DTC and social media. Meanwhile, brands like Levi’s and Nike are heavily investing in DTC, opening more of their own stores and making it easier for them to shop for new products online.
The question then becomes: “Why are you going to get a brand that is going to be on Stitch Fix when you can just go direct?” Ramirez said. According to the Wall Street Journal, one way Stitch Fix is trying to answer this is by investing more in private-label clothing.
Stitch Fix is also challenged by inflation, said Ramirez, as “the market is very volatile, and the consumer is still going to be very cautious with how they spend.”
For Stitch Fix, the challenge now is identifying how it is going to convince both new and old customers that Stitch Fix is still a service worthy of their dollars. Baer seems to hope his newly-created transformation arm can figure that out.