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Report: Stitch Fix to Lay Off 1,400 Workers, but Hire 2,000 Elsewhere

By Howard Smith – Jun 2, 2020 at 9:25AM

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The online clothing retailer is eliminating stylists in California and adding them in lower-cost states.

Online retailer and personal styling service Stitch Fix (SFIX -3.06%) said it would eliminate all of its stylist positions in California by the end of September, and eventually add more stylist positions in several lower-cost states, according to a Wall Street Journal report. 

The 1,400 workers represent 18% of the company's workforce. Those being laid off in California will have the opportunity to relocate as the company adds 2,000 new stylist positions in cities including Dallas, Austin, Pittsburgh, Cleveland, and Minneapolis. The new jobs will be added starting this summer, and through 2021, according to the report. 

A woman opening a box of clothing.

Image source: Getty Images.

Stitch Fix founder and CEO Katrina Lake said "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." The online retailer's business has been affected by the impacts of the COVID-19 pandemic. It had to suspend operations at two of its distribution centers in California and Pennsylvania in March 2020. It subsequently withdrew fiscal guidance for the remainder of the year due to uncertainty related to the pandemic. 

The company said California stylists who do not choose to relocate will receive a severance payment of at least two weeks based on tenure, continued healthcare, assistance pursuing new jobs, and, potentially, bonuses for remaining through the transition, according to the report. 

Lake called the action a "very difficult decision to reduce the number of stylists in our styling team in California, as we invest in our other styling hubs across the U.S., and the innovations that will help evolve our experience in the future." 

Howard Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Stitch Fix. The Motley Fool has a disclosure policy.

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