Stitch Fix (SFIX 20.23%) dropped a bombshell on Tuesday, announcing after the market close that founder and CEO Katrina Lake is stepping down. Lake will transition to the role of executive chairman of the board, effective Aug. 1, and President Elizabeth Spaulding will become CEO. Stitch Fix stock slumped nearly 6% in after-hours trading on the news.
The company tried to minimize the impact of the move, saying, "Lake will remain closely connected to the company," with emphasis on Stitch Fix's social impact efforts, focusing on the "intersection between sustainability and technology in apparel retail." Lake will continue to spearhead the brand and merchandising partnerships that drive the company's advertising.
In an open email to employees, Lake said, "This succession has been in the works for some time, and while change can be hard, I also believe in its transformational power." She went on to say "I can't imagine anyone else taking our company forward with such energy, passion, and optimism, and I am so excited for Elizabeth to step into the CEO role and for us to be partners in this next chapter ... Now is the right time to usher in the next generation for Stitch Fix."
Stitch Fix has had an often tumultuous relationship with Wall Street, growing in fits and starts, resulting in significant price spikes and plummets during its three-plus years as a public company. 2021 has been particularly representative of its historic volatility. The stock doubled during January, before giving back all those gains and more in the months that followed. The stock is currently down 17% year to date.
The pandemic accelerated the adoption of e-commerce, resulting in triple-digit revenue growth for many platforms, something Stitch Fix wasn't able to capitalize on. The company delivered just 11% revenue growth in 2020 and struggled with shipping delays during the all-important holiday shopping season, while spending per active client slumped 7% year over year.
Stitch Fix's recent struggles could have been a catalyst for the change at the top.