Shares of Stitch Fix fell more than 5% on Tuesday afternoon after the company announced that founder Katrina Lake would step down as CEO.
The company’s president, Elizabeth Spaulding, will become chief executive on Aug. 1, according to a press release.
Lake founded the online styling service a decade ago when she was studying at Harvard Business School. The company adds a personal touch to e-commerce for employees to choose clothes and accessories for customers who subscribe to the service or sign up for a solution. Items, tailored to each person’s style, are delivered by mail and include a prepaid envelope for return. Customers only pay what they keep and the style rate applies to their purchases.
Since Lake started Stitch Fix, it has become a company with nearly 4 million customers in the United States and the United Kingdom and approximately 8,000 employees. By the time Stitch Fix debuted on the stock exchange three years ago, she was the youngest woman to have a public company. (This distinction now belongs to Bumble CEO Whitney Wolfe Herd.)
However, the company has had an often tumultuous trip to Wall Street. Their profit reports usually lead to sales, although the stock price has risen over the years. Its shares debuted on the Nasdaq at $ 16.90 in 2017 and were $ 49.49 at the market close on Tuesday. Its market value is $ 5,262 million.
Stitch Fix has had issues recently with shipping delays and reduced customer spending. In March, it lost analysts ’revenue expectations for the first fiscal quarter. He said his active clients spent an average of $ 467, 7% less than at the same time a year ago.
He also fired 1,400 stylists in California, or about 18% of his staff, last year. At the time, the company said it planned to hire 2,000 stylists in other parts of the U.S. at a lower cost of living, such as Dallas or Minneapolis.
The company has expanded beyond its personal style and subscription-based model to generate sales. Customers can now purchase individual items, including some suggested based on previous purchases or recommended to complete a dress.
The company’s shares have fallen nearly 16% so far this year.
Stitch Fix said in a press release that Lake will continue to participate in the company as executive chairman of its board. He said he will also focus on the sustainability efforts of the personal style service and its marketing.
In a company-wide email, Lake said it’s the right time for a transition, as more customers buy clothing and other items online.
“The clothing retail is reinventing itself and Stitch Fix is very well positioned to address it,” he said. “This moment of transformation of our business and our industry makes it the right time to think about the next generation of leadership in our company.”
Prior to joining Stitch Fix, Spaulding was a partner in the consulting firm Bain & Company.