Stitch Fix, which sells clothing online and acts as a personal styling service, is axing 1,400 jobs in California as it moves to hire staff outside the state.
Stitch Fix stylists select clothing and accessories for subscribing customers.
The company withdrew guidance for its third-quarter and full-year last month due to uncertainty surrounding the coronavirus pandemic. It had previously closed two distribution centres in the US in compliance with Covid-19 health orders.
But the decision is understood to be part of on-going reviews undertaken into the efficiency and impact of the business since California is increasingly expensive and complex to operate in.
Stitch Fix employs 5,100 stylists. 1,400 roles in California will be impacted as the company invests in styling hubs in Austin, Dallas, Pittsburgh, Cleveland and Minneapolis where it expects to relocate/hire about 2,000 stylists throughout 2020/21.
All impacted stylists are being offered the opportunity to relocate.
Katrina Lake, founder and CEO of Stitch Fix, said: “We have taken the 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 US, and the innovations that will help evolve our experience in the future.
“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. We are committed to supporting our people through this by providing as much financial stability as possible, including severance payments that increase with tenure, bonuses for stylists staying with us during the transition period, extended healthcare and recruitment resources.
“Stitch Fix was built one relationship at a time, and our stylist community is an increasingly vital part of the Stitch Fix experience – one we believe gives us the ability to engage with our clients in a deeply personal way, especially now when empathy and human connection are more important that ever.”
Last year, the company acquired the technology and IP of digital wardrobe platform Finery, which aims to help consumers style clothes they already own by using shopping receipts to “build” a wardrobe.