Online personal stylist startup Stitch Fix is contemplating an initial public offering, turning down late-stage investments to clear that path, sources told Bloomberg, adding that executives have been in early talks with bankers about a potential deal.
But a Stitch Fix spokesperson refuted Bloomberg's claims, saying it hasn’t turned down late-stage funding from interested investors and its board of directors will not be meeting next month to decide on plans for an IPO.
Founded in 2011, Stitch Fix 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.
Despite their popularity among consumers, it’s not clear how these players are doing financially, considering nearly all of them are privately-owned companies. But Nordstrom's Trunk Club, which began as a concierge service for men but now also styles women, perhaps gives a clue to the concept’s viability: 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), and it’s not yet profitable; 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 shortening 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, but a styling approach based more on inputs like a questionnaire than the direct human communication involved with Trunk Club and other services.