Stitch Fix Cutting 1,400 Stylists in California

Stitch Fix CEO Katrina Lake says the layoffs are 'the right thing to do for our business.'

Stitch Fix  (SFIX) - Get Report, the online clothing service, will be laying off about 1,400 California-based stylists, or about 18% of its total staff.

"Any decision that impacts our hardworking and talented people is incredibly tough, but we believe this is the right thing to do for our business," Stitch Fix CEO Katrina Lake said in a statement to The Wall Street Journal. 

The company has bout 8,000 employees, 5,100 of which are stylists who help select the items that are shipped to customers each month via subscriptions.

Most of the layoffs will take place in September. The company will provide severance payments, bonuses and extended healthcare coverage to affected employees, the Journal said.

“All of our California-based stylists will be offered the opportunity to relocate to the new roles in other states,” CEO Lake said. 

Stitch Fix said it would be hiring about 2,000 stylists in lower-costs cities such as Dallas, Pittsburgh, Cleveland, Minneapolis and Austin, Texas, beginning this summer through 2021.

Stitch Fix was forced in March to temporarily close two distribution centers to comply with coronavirus health orders. The company also withdrew guidance for the third quarter and fiscal 2020 because of uncertainty created by the pandemic.

"While we anticipated our business would be impacted, we did not have visibility into the extent to which it would disrupt our distribution centers," Lake said at the time.

Stitch Fix is expected to issue its quarterly earnings report next week. 

Shares of San Francisco-based Stitch Fix were rising 3.18% in premarket trading Tuesday to $24.37. The stock closed Monday at $23.62, up 2.16%.