Dive Brief:
- Stitch Fix Chief Operating Officer Julie Bornstein, who's been in the position for the past two years, quietly left the company last week to seek "a new challenge," which entails hopes for a chief executive role, Recode reports.
- Because of the awkward timing though, just ahead of the subscription apparel retailer's planned initial public offering, Recode's Jason Del Rey speculates there may be more to the story, either disagreement among the company's top management or an actual opportunity for Bornstein to serve as CEO somewhere.
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Bornstein has served in various executive positions at Sephora, Urban Outfitters and Nordstrom.com, according to Recode, and has expressed interest in leading a company. A request for details or comment from Retail Dive wasn't immediately returned.
Dive Insight:
Earlier this year, privately-held Stitch Fix 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, the online personal styling service last month tapped Paul Yee, who has extensive experience at major brands, as CFO, and speculation about an IPO intensified.
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); it’s 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.
