Stitch Fix quietly files for an IPO
The provisions allows the IPO review process with the Securities and Exchange Commission to remain confidential. A request to Stitch Fix from Retail Dive for more details or comment was not immediately returned.
- Stitch Fix Chief Operating Officer Julie Bornstein, who had been in the position for the past two years, quietly left the company in recent weeks to seek "a new challenge." The apparel subscription company tapped Paul Yee, who has extensive experience at major brands, as CFO just last month.
Stitch Fix, in business for just five years, has garnered backing from venture capital firms Baseline Ventures, Benchmark, Lightspeed Venture Partners and Western Technology to the tune of $46.75 million in three rounds, most recently $30 million in 2014. The online personal styling space is pretty crowded, with rivals MMLaFleur, Tog & Porter, Dia & Co., Bomb Fell, Frank and Oak, Five For Five, Bungalow, Trunk Club and others vying for attention from shoppers and, in some cases, investors.
Earlier this year, the privately-held startup said it had $730 million in revenue in the 2016 fiscal year, marking its third consecutive year of profitability. At the time, it pushed back against rumors that it was turning down late-stage investments to clear a path to an initial public offering. However when Yee arrived in June, speculation about an IPO intensified.
Subscription services are proving to have enduring popularity among consumers, but the long-term financial viability of the model remains largely unproven. Nordstrom's Trunk Club for example, began as a concierge service for men and now also styles women. But while it gets high marks from users, Nordstrom wrote down $197 million of that business last year. Three years ago, Nordstrom acquired the service, started by Bonobos co-founder Brian Spaly (who left late last year as CEO). Still, Trunk Club is not yet profitable and the nearly $200 million non-cash goodwill impairment represents more than half of the $350 million Nordstrom paid to purchase it.
To stem those losses, Nordstrom last year instituted a $25 at-home try-on fee (which can be credited to a purchase) and shortened the return window. San Francisco-based Stitch Fix similarly has a $20 try-on fee that can be used toward a purchase and generally offers prices that are lower than Trunk Club thanks, in part, to a less costly styling approach based on inputs from a questionnaire rather than Trunk Club's direct human interaction.
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