Stitch Fix Inc. is moving forward with sizable layoffs beginning this week.
On Monday, the personal styling service told about 1,400 California-based stylists, or about 18% of its staff, that they will be let go. The layoffs will be done in two phases, with a round of less-tenured Southern California employees to exit on June 5 and remaining stylists to depart in September.
A small team will remain in place to support initiatives. Stitch Fix plans to provide severance, bonuses and extended health insurance benefits to laid-off workers.
Those impacted by the layoffs will be eligible to relocate and stay with the San Francisco-based startup, which plans to hire about 2,000 stylists in lower-cost cities, such as Pittsburgh, Minneapolis and Dallas, beginning in July and into next year.
Founded by Katrina Lake in 2011, Stitch Fix has a staff of about 8,000 people, with stylists representing about 5,100 of the total. Stylists help select the clothing and accessories that customers receive in their monthly boxes. Consumers can pay for the items they wish to keep and return the rest.
Like other companies in the fashion space, Stitch Fix has been negatively impacted by the coronavirus outbreak. The retailer warned customers of delays to orders and returns last month after it was forced to temporarily close two distribution centers, in Pennsylvania and California, because of public health orders. It withdrew its fiscal-year forecast in April, and will report quarterly earnings on Monday, June 8.
Unemployment has climbed amid the coronavirus crisis, with the retail industry being particularly hard hit. Since the pandemic escalated in mid-March, over 40 million Americans have filed initial jobless claims. The May jobs report, which is slated for release on June 5, is expected to show an unemployment rate of nearly 20%.