RM LAW, P.C. announces that a class action lawsuit has been filed on behalf of all persons or entities that purchased Stitch Fix, Inc. ("Stitch Fix" or the "Company") (NASDAQ: SFIX) securities during the period from December 8, 2020 through March 8, 2022 inclusive (the “Class Period”).
Stitch Fix shareholders may, no later than October 25, 2022, move the Court for appointment as a lead plaintiff of the Class. If you purchased shares of Stitch Fix and would like to learn more about these claims or if you wish to discuss these matters and have any questions concerning this announcement or your rights, contact Richard A. Maniskas, Esquire toll-free at (844) 291-9299 or to sign up online, click here.
According to the complaint, Stitch Fix initially sold products as a “Fix” box, through which the customer would receive a monthly box of items chosen by a personal stylist. The customer would not know specifically which items they were receiving but would have the option to return whichever items it did not want. On December 8, 2020, Stitch Fix launched the “Freestyle” program—a new, direct buy program where customers could choose from the outset which items to purchase. In connection with that announcement, Stitch Fix touted the Freestyle program as a way to “expand our addressable market, deepen client engagement and grow wallet share over time.” The Company also stated that Freestyle would “serve as another catalyst as we attract new clients, convert prospective clients and reactivate lapsed clients.”
During the Class Period, defendants touted that the two programs were synergistic, and repeatedly denied claims that the Freestyle program could cannibalize its legacy Fix business. On December 7, 2021, however, Stitch Fix admitted for the first time that the Company had downplayed the magnitude of its transition from the subscription-based Fix model to the retail-based Freestyle model. Stitch Fix further admitted that the Company saw some “short term cannibalization” from new customers who chose to use the new direct-buy Freestyle option rather than the traditional Fix option. In addition, Stitch Fix announced a loss for its first quarter of 2021 and cut its full-year revenue projections. As a result of these disclosures, the price of Stitch Fix stock declined by $5.97 per share, or 24%, from $24.97 per share to $19.00 per share.
Stitch Fix continued to assure investors that this was a short-term problem, claiming that the Company had “been testing client onboarding flows” and that “we see significant new client potential ahead as Freestyle enables us to access a greater share of shopping occasions.” Then, on March 8, 2022, Stitch Fix offered a weak outlook for its third quarter of 2022 and cut its revenue guidance for the full year. In addition, Stitch Fix announced a self-inflicted friction between the Freestyle program and the Fix program. Specifically, Stitch Fix explained that when customers visited stitchfix.com—the primary landing page for customers interested in the Fix—the Company directed them to the Freestyle experience first, and “therefore, in leading clients to the Freestyle experience first, [it] inadvertently created friction” for potential customers interesting in ordering Fix. As a result of this disclosure, the price of Stitch Fix stock declined by 6%, from $11.01 per share to $10.34 per share.
If you are a member of the class, you may, no later than October 25, 2022, request that the Court appoint you as lead plaintiff of the class. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff." Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain RM LAW, P.C. or other counsel of your choice, to serve as your counsel in this action.