Stitch Fix Files for IPO

Stitch Fix, the online personalized styling service, announced yesterday that it has filed for an initial public offering (IPO). While the company didn't state how much it expects to raise, sources familiar with the situation said the retailer anticipates it will be valued at roughly $3 billion to $4 billion. An IPO filing had been rumored for a while. Stitch Fix is a variant on the popular e-commerce subscription box model, and has focused on scaling its business with an eye to profitability. In fiscal 2017, the company reported $61 million in earnings, down from $73 million in 2016. That was off $977.1 million in sales in 2017, up from $730.3 million the year prior.

Total Retail’s Take: The retail industry is watching this IPO closely, as it will be the first test of investor reception to a new breed of online shopping companies. It's also the first retail IPO since Blue Apron's disappointing filing. When the meal-kit company filed its IPO, investors balked over concerns around its profitability and the increased threat from Amazon.com in the wake of its acquisition of Whole Foods Market. And news has not been good for Blue Apron lately: The company’s shares are down 43 percent since its IPO was filed, and it disclosed Wednesday in a regulatory filing that it would lay off 6 percent of its workforce. Will Stitch Fix suffer the same fate as Blue Apron? On thing that Stich Fix has going in its advantage is the tremendous amount of customer data it possesses. To subscribe to the service, customers fill out a survey of their preferences based on size, budget and style. The company then sends five personalized apparel and accessories items, which customers can either return or buy at a discount. This personalized approach, says Stitch Fix, is what sets it apart from retailers.