Stitch Fix, the renowned personal styling and e-commerce platform, has officially confirmed its exit from the UK market. The announcement was made on August 25th, 2023, via an Instagram post. The company stated that their journey in the UK was coming to an end, with plans to deliver the last UK shipments by October 31st.
The decision to exit the UK market comes after a series of financial setbacks for the company. Stitch Fix had been struggling to maintain a solid performance since the onset of the pandemic. Despite soaring initially, the company reported declining sales, a decreasing customer count, and consistent losses. The third fiscal quarter of 2023, which ended on April 29th, continued this downward trend.
In June 2023, Stitch Fix had hinted at the possibility of exiting the UK market in the fiscal year 2024. The company cited a weakening macroeconomic environment and increasing costs as the primary reasons behind this consideration. Since its entry into the UK market in 2019, the company's business landscape had significantly changed, prompting a strategic refocus on its US operations.
Stitch Fix's UK operations represented approximately $50 million in annual revenue in fiscal 2023. However, the region also recorded a $15 million loss before interest, taxes, depreciation, and amortization. The company's net revenue dropped by 20 percent for the third quarter of the current financial year, further emphasizing the need for a strategic shift.
The company's exit from the UK market is expected to result in $50 million in annualized expense savings. Additionally, the closure of two distribution centers in the US is anticipated to improve sales and customer retention by providing stylists with more inventory to choose from.
Despite the exit, Stitch Fix remains committed to its customers. In light of the closure, the company is offering up to a 70 percent discount on items that customers wish to keep from their styling boxes. Customers can continue to schedule boxes over the coming months as the company gradually winds down orders. Stitch Fix's exit from the UK market marks a significant shift in its business strategy.
