Stitch Fix CFO to exit as declines persist

Dive Brief:

Effective April 3, Chief Financial Officer Dan Jedda is leaving Stitch Fix, and David Aufderhaar, senior vice president of finance, has been promoted to succeed him. Jedda arrived from Amazon in late 2020, and will become CFO at streaming device company Roku in May.
The apparel box e-retailer failed to stem declines in its most recent quarter, reporting Tuesday that Q2 net sales fell 20.2% year over year to $412.1 million, as net loss widened 112% to $65.6 million. The number of active clients fell 11.1% year over year and 3.6% month over month to 3.57 million, as revenue per active client declined 6%.
However, the company’s effort to trim expenses, including layoffs and the closure of a distribution facility, has improved its cash flow. “Our goal remains to achieve positive adjusted EBITDA and free cash flow in the short term, while continuing to position ourselves for profitable growth in the future,” Jedda told analysts.

Dive Insight:

A few years ago, Stitch Fix turned to a couple of Amazon veterans in a quest for growth. Shortly after Jedda’s arrival, Sharon Chiarella, who had served as vice president of community shopping at the e-commerce giant, joined the apparel box company as chief product officer.

Chiarella left a few months after her arrival as then-CEO Elizabeth Spaulding’s tenure took hold, and now Jedda is also departing.

Instead, the company is turning to its own veterans as it works to stem declines and reignite growth. When Aufderhaar joined Stitch Fix four years ago it was “with an eye” toward taking the top finance post, interim CEO Katrina Lake told analysts on Tuesday. The founder herself is temporarily back as chief executive following Spaulding’s abrupt exit in January.

But the CFO departure amid the search for a permanent CEO is a red flag for some, with UBS analysts led by Kunal Madhukar warning that it “raises questions about the [long term] strategy” and how it might change when new management comes along.

Wedbush analysts led by Tom Nikic also noted the turnover.

“There's not a lot of silver linings here,” Nikic said in emailed comments. “They're bleeding customers, revenues are sharply negative (and worsening on a multi-year stack basis), gross margins are under heavy pressure [down 410 basis points year over year] and there's uncertainty in the C-suite.”