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On March 8, 2022, Stitch Fix provided a weak outlook for its Q3 2022 and cut its revenue guidance for the full year. Also, Stitch Fix announced self-inflicted friction between the Freestyle program and the Fix program.
On this news, the price of Stitch Fix stock declined by 6%.
Back 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) to “expand our addressable market, deepen client engagement and grow wallet share over time.” The Company 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. But the Company continued to assure investors that this was a short-term problem.
Taking into account all the statements of the Company and the actual results, there are grounds for suspicion that there was misinformation or negligence from the Company's management, which led to significant losses for investors.
Failure to Disclose,
Shock Event Date
08 March 2022