Stitch Fix is getting rid of the full-time styling role, instead opting to staff its team of stylists with part-time workers in a cost-cutting move.
On Thursday, Stitch Fix sent out an email to stylists notifying them of the changes. Now, stylists face a choice: Both full-time and part-time employees have to choose from one of three “tiers” if they choose to stay with the company. They can either work 28 hours a week, 12 hours a week or a flexible number of hours sometime between 10 and 20 hours a week, which could ebb and flow from week to week depending on the level of client activity. The company also eliminated about 10 styling leadership positions as a result of these changes.
While Stitch Fix’s styling service is core to its business, these changes are just the latest retrenchment the company has made in its styling business over the last few years as the company tries to figure out the role and importance of stylists going forward. In fiscal 2023, Stitch Fix’s revenue decreased by 21% year-over-year, while its number of active clients decreased by 13%. Meanwhile, newer bets like its à la carte shopping service, Freestyle, haven’t panned out as planned. In June, Stitch Fix named a new CEO, former Macy’s chief digital officer Matt Baer, who so far sought to cut costs by sunsetting the company’s U.K. business and shrinking its fulfillment operations.
In an email to Modern Retail, a Stitch Fix spokesperson said, “As we continue to evolve our business to ensure we are delivering the most innovative, personalized and convenient online styling experience, this week we shared changes to our organization, including moving to a part-time only model for Stylists.” The spokesperson noted that the majority of stylists are part-time, and that by moving to a fully part-time model, Stitch Fix is able to maintain flexibility while “while effectively meeting the needs of our clients and our business.”
As a result of these changes — which will be effective as of March 31 — full-time employees will lose access to some benefits including health insurance. Full-time employees who opt not to take a part-time role will get a severance package.
In a subreddit designed to be for Stitch Fix stylists, members criticized the changes. Some said they were trying to figure out whether or not to quit or to drop down to part-time work, as well as what to do about the benefits they would lose through Stitch Fix. “I’ve been so overwhelmed and trying to talk this through with my partner,” one member of the subreddit wrote. “My benefits support us and my children and now being under 30 hrs I will lose my benefits as well as a solid chunk of our important income to support our family.”
Stitch Fix, founded in 2011, is a styling service that people turn to to find new clothing. Clients fill out an initial quiz with details about what they are looking for, and then stylists use that information — aided by the company’s algorithms — to send clients five items of clothing. Clients then send back any items they don’t want to keep. Clients pay a $20 styling fee, though that item goes toward any items they want to purchase. After amassing more than 2 million active clients in six years, Stitch Fix went public in 2017. But as growth started to slow, the company experimented with new concepts like an à la carte shopping service called Freestyle.
Stitch Fix has long described stylists as being “the heart of the business.” But this type of language has also created an inherent tension between Stitch Fix and its stylists whenever they are faced with layoffs or job changes.
In 2020, Stitch Fix employed about 8,000 people and 5,100 stylists, a mix of full-time and part-time employees. In its 2023 annual report, which Stitch Fix filed in July, the company reported that it now employed 5,860 people, including 2,620 stylists. Before Thursday, approximately a quarter of those stylists were full-time.
When Stitch Fix went public in 2017, it quickly became a darling on Wall Street, going public at a $1.4 billion valuation, and then surging to a $4.8 billion valuation roughly a year later.
But today, Stitch Fix’s market cap has fallen to just $384 million. The company has struggled to retain clients in the face of rising competition, which now includes rental services like Rent the Runway and Nuuly. In its fiscal first-quarter earnings, reported, in December, Stitch Fix reported a net loss from continuing operations of $26.2 million.
The first big change Stitch Fix made to its styling operations came in 2020, when the company laid off 1,400 stylists in California, citing the fact that it had gotten too expensive to employ so many stylists there. There were other changes that fueled tension between Stitch Fix and its stylists, like new metrics increasing the number of “fixes” clients had to complete in an hour, and an increased focus on using the company’s algorithms to complete fixes. And there have been more layoffs over the years as Stitch Fix losses grew and its active client numbers shrunk.
In the subreddit for Stitch Fix stylists, multiple members decried the company as a “sinking ship,” and as they figured out what their next steps would be, some were eager to finally get away from the company.
“Honestly, a big part of me feels relief and a bit of excitement that this will help drive me a bit more from this toxic company into places that are healthier for me and pursuits that are more me,” one member wrote.