Matt Baer is stepping in for a fix at Stitch Fix Inc. as chief executive officer, putting his digital experience from Walmart Inc. and Macy’s Inc. to work at the styling service.
Founder Katrina Lake, who took the reins as interim CEO when Elizabeth Spaulding left in January, will remain executive chairperson.
Wall Street remained wary.
Shares of Stitch Fix fell 12 percent to $4.20 on Wednesday, a decline that surprised Wedbush analyst Tom Nikic.
“We actually think it was a wise move to hire an executive with experience in the apparel industry, as it’s becoming increasingly clear that selling clothes online isn’t as easy a task as it once seemed,” Nikic said.
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“Mr. Baer certainly has his work cut out for him — first order of business: stop the customer attrition and the double-digit revenue declines,” the analyst said.
But the work to turn Stitch Fix around has already started.
In her brief return to the corner office, Lake moved to protect the company’s balance sheet, cut costs and manage inventory to weather macroeconomic woes and prepare the company — once a retail tech darling — for a resurgence.
Stitch Fix has stabilized some since pivoting away from its focus on the Freestyle direct-buy shopping experience Spaulding championed, but Baer clearly has more to do.
The company’s revenues fell 20 percent to $394.9 million for the third quarter ended April 29, with the active client base slipping 11 percent year-over-year to 3.4 million.
The incoming CEO said: “As someone with retail in my DNA, I’ve long admired what Katrina has built with Stitch Fix — fusing AI with stylists to offer the most convenient shopping experience out there today. People are looking for a better way to look and feel great. Stitch Fix is uniquely positioned to deliver that for them. I look forward to working with the talented team at Stitch Fix and leveraging my years of experience building and scaling retail businesses to deliver a sustained future of profitable growth.”
Baer officially becomes CEO on June 26, stepping up to become chief of a public company that is very much under the glare of Wall Street and also looking to get its groove back.
Most recently, Baer was chief customer and digital officer at Macy’s, where he oversaw the strategic vision of the Macy’s and Bloomingdale’s digital businesses. Before that, he was vice president of e-commerce at walmart.com.
Lake said: “As we’ve gotten to know Matt, I, our board of directors and our management team were all impressed by his experience across all areas of retail businesses and his ability to identify the interconnected opportunities to positively impact the experience of our clients in the short term, while inspiring our teams to deliver an impactful vision for the future. With Matt as our CEO, alongside our experienced management team, and with the continued commitment, passion and expertise of the whole Stitch Fix team, I’m confident we can continue to build on our significant competitive advantage in leveraging data and stylists to deliver the most personal experience in the industry and drive growth for the future.”
Just when that future growth will come remains to be seen.
Dylan Carden, an analyst at William Blair, said Baer’s experience in the customer engagement space was important and that Stitch Fix could benefit from its efforts to rightsize.
“Marketing spend in the back half of the year is poised to fall by roughly 45 percent year-over-year as the company shifts its focus on retention of its core customer over new customer acquisition,” Carden said. “We note that the company had positive operating profit from 2017 to 2021 despite having a lower customer base than it currently has for the majority of that period. We see the opportunity for a smaller business that is more focused on its profitable core customer with lower levels of marketing spend. The main risk to the stock is the lack of visibility into an inflection point in the model.”
While Stitch Fix briefly enjoyed a market capitalization of more than $11 billion in 2021 — when e-commerce businesses focused on at-home experiences soared — the value of its shares has fallen to about $477 million.
Many other consumer companies have fallen in that time frame as well, but the decline is all the more stark given that the 12-year-old Stitch Fix was also very early to the AI scene, mixing artificial intelligence and human stylists to pick looks that were sent to consumers as a kind of solution for shoppers who don’t like to actually shop.
Now talk of AI is everywhere and Stitch Fix is looking to claw back and use its techie headstart to its advantage.