IPO Watch: Stitch Fix Aims to Give Everyone a Personal Shopper


Stitch Fix - plus sizes

Thirty-four-year-old Katrina Lake, co-founder and CEO of Stitch Fix (tagline: “Your online personal stylist”), is the youngest female founder to take a company public in the U.S.

Stitch Fix’s value proposition is it’s an affordable (though its price points are expanding) remote fashion stylist, with customers ordering boxes of items curated (by human stylists) to fit their measurements, likes and dislikes, price points and style. There’s no obligation to buy: “No subscriptions, no strings, no stress.”

Customers can choose which of the five items to purchase and send the rest back, and order via subscription or on the spur of the moment online. There’s a $20 styling fee; buy all five items and receive a 25% “buy five” discount; the styling fee is always fully credited. Customers can also share their preferences via a Pinterest board, and shipping is free both ways.

Or as Stitch Fix puts it:

Get a personalized wardrobe shipped straight to your door with styles that fit your budget and lifestyle. No subscription. No stress. This is Stitch Fix. Our expert Stylists will learn what you like to send you clothes you’ll love. Want to try it? Simply fill out the Stitch Fix Style Profile, which tells us all about which styles you love, then schedule when you’d like your first Fix to be delivered. Your Stylist will handpick five pieces of clothing and accessories just for you. Buy what you like and return the rest (shipping is free both ways). It’s not just clothes. It’s you, styled.

The company has grown to $977.1 million in annual revenue in just six years and last year saw $33.2 million in net income. Its stock price was up one percent on the first day of trading; after pricing at $15, the company closed at $15.15, below the opening trade of $16.90.

Already expanding its services to men, petite and plus sizes, it’s looking for growth by adding pricier, luxury brands.

“Stitch Fix is one of a new breed of e-commerce companies, and it has to pitch Wall Street that it can be a consistent business and remain profitable over time,” TechCrunch commented. “The company makes its pitch to investors the weeks following its official filing for its IPO and then tries to calibrate where it should price its shares in the process.”

Its e-commerce approach includes a management team split 50/50 by gender and a seven-member board of directors with three women. Lake personally holds at least $219.6 million in assets in Stitch Fix as well as a stake in food delivery company Grubhub, where as a director, her share is worth $53,895.

The co-founders’ vision (co-founder Erin Morrison Flynn departed pre-IPO for undisclosed reasons) was a new retail model bringing a personalized shopping experience into the homes of women who didn’t have access to a stylist, nor the time to shop.

The brand has about two million active customers today, and a  management team that includes top executives from Netflix, Walmart and Nike, all on board since 2012 or 2013.

The “thing that leads to really big home runs are the entrepreneurs that have the audacity and capability to go recruit high to build a team,” Bill Gurley, the Benchmark venture capitalist who sits on Stitch Fix’s board of directors, said in 2015. “You’ll hear entrepreneurs say they want to hire people who are smarter than they are, but some of them are intimidated and some of them just can’t close.”

Lake has done more with less, raising “just” $42 million, a fraction of most venture-backed start-ups. Male-dominated Silicon Valley start-ups often raise too much money VC capitalist Bill Gurley, a backer of Uber, told Bloomberg. “The excessive amount of capital in Silicon Valley has allowed a lot of entrepreneurs to run around without much discipline because if you’re not running out of money you’re not constantly asking to be regarded.”

The competitive landscape includes Le Tote, Trunk Club, Wantable, Boon + Gable and Dia & Co. among others. Amazon is testing a service called Prime Wardrobe, while Rent the Runway is trialing subscription boxes and Rocksbox has a similar offering for jewelry.

While the longer-term prospects for Stitch Fix are unclear—how often users will order, how it will scale its stylists and how many items customers will buy—Lake has already raised the bar on female-led businesses willing to take on the competition and set the bar high for equitable business.

Glossier CEO Emily Weiss tweeted on the day the IPO paperwork was filed:

So did Rent the Runway’s co-founder and CEO Jennifer Hyman:

“I want her to have a huge positive outcome because it does something really important for female entrepreneurs and, specifically, founder-CEOs,” said Hyman. “I want her to have this success because we work in an industry where pattern recognition is still the name of game. So the more people like Katrina — and hopefully people like myself — who deliver results, the more other women are going to get opportunities.”